Remodeling demand is on the rise as unfavorable buying conditions cause many sellers to hold their upper ground and give their existing homes a makeover. Home equity per owner reached a record high of $315K after an inflation-adjusted gain of $95,000 in 2019, incentivizing homeowners to build personal wealth in a high-cost market.
Also, with few “trade-up” homes available and mortgage rates on the rise, would-be buyers are instead opting to customize, update, and upgrade rather than entering into a competitive buying pool with a lack of available inventory nationwide. A rise in remodeling projects is also driving up costs for building materials, which have increased by 23% in just the last year, John Burns Real Estate Consulting reports.
At 1.6 months of supply, the current inventory of existing homes for sale is at the lowest level in history, severely limiting choices for would-be home buyers. To accommodate demand for additional space and functionality, particularly with today’s surge in work-from-home trends, big remodeling projects have been surging.
Remodelers have never been busier. 48% report doing more projects than one year ago, and 65% report that the projects are larger than one year ago.
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