Many homeowners are feeling more confident about taking on home remodeling and maintenance projects.
As the housing market continues to improve, many homeowners are feeling more confident about taking on home remodeling and maintenance projects this year. According to its third annual Harris Poll1 survey, LightStream, the national online lending division of SunTrust Bank, found 62 percent of homeowners plan to spend money on home improvement projects, an increase of 9 percent over 2015.
Budgets also have increased from years past. Forty percent of homeowners plan to spend $5,000 or more (up from 36 percent in 2015) and 22 percent plan on spending $10,000 or more (up from 18 percent last year). Overall, projects will average $6,239, compared to $5,037 last year. Moreover, the Leading Indicator of Remodeling Activity (LIRA) released by the Remodeling Futures Program at the Joint Center for Housing Studies (JCHS) of Harvard University2 anticipates annual spending growth for home improvements will accelerate from 4.3 percent in the first quarter of 2016 to 7.6 percent in the third quarter – shattering record numbers set in 2006.
For 45 percent of respondents, outdoor renovations are their focus, investing in a deck, patio or landscape makeover. Five percent have plans to add a pool or spa. Although many realtors and industry experts say that outdoor renovations better the chance to sell a home, LightStream found only 9 percent of those surveyed are renovating this year to prepare their home for sale. Today’s homeowners are renovating to meet their own needs and desires.
As far as other popular renovation projects for 2016, bathroom remodels were second (31 percent), followed by home repairs with 30 percent of homeowners interested in installing a new roof, windows or HVAC or solar power system. Kitchen remodels (23 percent) and basement or attic remodels (10 percent) were next on the list. While remodeling activity continues to rise, JCHS analysts believe the home remodeling industry will face unique hurdles this year. One challenge noted is whether the industry can find solutions to consumer financing concerns.
Sixty-two percent of homeowners plan to pay for renovations with savings. But even these people often find that project creep may unexpectedly increase their budgets. This makes it important to be aware of cost-effective ways to pay for some or all expenses associated with a home remodeling or maintenance project.
Before borrowing any money, homeowners should research their options and shop around for the financing. For instance, a home equity line of credit (HELOC) may be a good option, but not everyone has sufficient equity in their homes to access. Also, some HELOC’s come with high rates and approval processes which can take several months. However, lending companies such as LightStream offer unsecured home improvement loans starting as low as 3.99 percent APR with AutoPay3 which allows people with good credit to borrow between $5,000 and $100,000 with no fees or paperwork. Funds can deposited directly into a borrower’s bank account (often as soon as the day they apply when conditions are met). Home improvement professionals and contractors have found that this financing provides a fast, simple solution for their customers to fill the gap between their budgets, “wants” and actual costs. The best part for the contractor is that they don’t have to participate in the loan application process or pay any fees or discounts for a LightStream loan.
Overall, industry experts and professionals should look forward to this year’s home improvement spending. As long as consumers stay aware of their financing options, the industry can expect to meet the metrics set for this year – and maybe even surpass them. [Conditions and limitations apply. Advertised rates and terms are subject to change without notice. Rates are accurate as of March 28, 2016.]
TODD NELSON is the business development officer for LightStream, the online lending division of SunTrust Bank. LightStream offers unsecured loans including 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/home-improvement-loan.