Home improvement refers to a variety of projects designed to upgrade the appearance and functionality of a home. The industry includes retail stores that sell building materials, appliances and decor for these projects, as well as contractors who perform construction or installation work. The market grew quickly during the COVID-19 pandemic as homeowners focused on making their houses safer and more comfortable.
During the first two years of the pandemic, Americans spent $522 billion on home improvement projects, an increase of $72 billion over the previous two-year period. The average project cost also increased.
However, even though the number of home improvement projects has fallen since the peak of the pandemic, the industry is expected to reach record high revenues this year and continue growing through 2024.
In a NerdWallet survey, nearly all homeowners (95%) said they were considering taking on one or more home improvement projects within the next two years. Some are planning minor fixes, like painting a room or updating light fixtures. Others are looking at more upscale, extensive renovations. These typically bring lower returns, but are worth it if you plan to stay in the house for another decade or more and want to boost your home’s resale value.
The most popular projects homeowners are thinking about include adding a deck, putting in a fence and refinishing the hardwood floors. More than half of those considering a major project also say they’re planning to renovate the kitchen or bathroom. Other projects gaining popularity include redoing the landscaping and installing solar panels. The most common reason given for wanting to make improvements is that they can make their homes more comfortable and functional for themselves and their families. Other top reasons include improving the home’s curb appeal and making it safer for kids and pets.
More than 40% of those who took on home improvement projects during the pandemic said they were able to pay for most or all of them without having to sacrifice any discretionary spending or going into debt. But for the rest, cash was not enough to cover all their projects. Among them, 14% had to tap into or exhaust their emergency savings and 12% borrowed against their equity in their home.
Despite a slowdown in the overall economy, rock-bottom mortgage rates are likely to continue to fuel some of this year’s and 2024’s home improvement spending. And if you don’t have the savings to fund your projects, a personal loan may be a good option for getting the money you need. Before applying, compare multiple loan offers to find the best rate and terms. You can also pre-qualify for a home improvement loan with multiple lenders to speed up the process. This doesn’t affect your credit score and requires only basic information about you and your finances. Then, gather the required documents to submit with your application. For faster approval, lenders often prefer to receive these documents electronically. But that’s not always possible, and you may still have to fax or mail them in.