THE HOME IMPROVEMENT RESEARCH INSTITUTE PREDICTS AN 5.8 PERCENT INCREASE IN RENOVATIONS THIS YEAR.
More than half of homeowners (57 percent) plan to spend money on home improvement projects this year, according to a recent SunTrust survey conducted online by Harris Poll. In fact, the Home Improvement Research Institute predicts an increase in renovations by 5.8 percent, up from 4.9 percent last year. With consumer confidence on the rise, the home improvement industry is expanding, and the influx of a new generation of homeowners is beginning to set the stage for even greater growth opportunities. In 2013, baby boomers were responsible for almost half of all home renovation spending, according to the Joint Center for Housing Studies at Harvard University. But the population of millennials is expected to reach 75.3 million and outweigh boomers this year. This means a new market of young homeowners will be looking to increase space for a growing family, lower energy costs to reduce their carbon footprint, or perform routine maintenance to upkeep one of their largest investments. With homeowners having projects in mind and budgets to match, consumer renovation trends include:
To enjoy the warmer weather, homeowners are focused on making the most of the great outdoors. The SunTrust survey suggests that popular projects spotlight the outdoors, with 43 percent of respondents investing in a deck, patio, pool or landscape remodel. In fact, outdoor projects likely will begin to drive a significant share of growth in the future of the home improvement market.
Home maintenance is next on the list as a priority for 33 percent of homeowners. The survey reports that consumers plan to focus on home repair, such as a new roof, windows or HVAC system. In addition, consumers are interested in adding sustainable energy options to their renovation, such as solar power, to help save money on utility bills and reduce impact on the environment. Bathroom remodels (29 percent) and kitchen remodels (26 percent) also remain popular.
Boosting the Budget
Homeowners also are stepping up their budgets. The Joint Center for Housing Studies at Harvard University reports that the share of spending on discretionary projects increased for the first time since before the housing crash.
According to the SunTrust survey, 36 percent of consumers plan to spend more than $5,000 and 18 percent plan to spend more than $10,000 on their home renovation, confirming higher spending expectations. A generational shift is also seen in spending. Although baby boomers are still a large portion of the home improvement market, gen X and millennials are catching up, contributing to 36 percent of spending. As younger generations begin to plan for renovations, their increased presence in the market will drive up spending, most likely sustaining year-over-year growth.
Strategic Financing Solutions
While the market is evolving, so is the way consumers plan to pay for renovations. With a number of options to consider, how are consumers planning to finance their renovation? A majority (59 percent) are choosing one of the simplest options: savings. After years of saving in a struggling economy, consumers are ready to use their cash for their homes.
Credit cards are also popular, with 30 percent of renovators planning to use this method. Offering lower rates and rewards to consumers with good credit, credit cards can be are a popular option to finance a home renovation. Many credit card companies offer fraud protection and monitoring, helping to keep investments and identity secure.
A unique form of financing seven percent of consumers plan to use this year is an unsecured loan, but it’s important to shop around. While many unsecured loans come with high interest rates and lengthy approval times, options like a home improvement loan from LightStream provide a simple online process and offer competitive benefits such as low, fixed rates and no fees.
TODD NELSON is the business development officer for LightStream, the online lending division of SunTrust Bank. LightStream offers unsecured home improvement loans to borrowers with good to excellent credit at low fixed rates with absolutely no fees. For more information on a home improvement loan, visit www.lightstream.com.