It’s a good time to own Home Depot stock. Or a hardware store. Or a contracting business.
America is in the middle of a home renovation bonanza, according to research from Golden-based HomeAdvisor.
The average homeowner invested $6,649 in home improvements between March 2017 and March 2018, according to HomeAdvisor’s True Cost survey. That’s up $1,492 over 2017, itself a year in which HomeAdvisor’s annual survey tracked an $1,850 jump in consumer spending on home improvements.
The craze is multi-generational. Millennials completed more projects than any other age group, even if they spent 32 percent less on average compared to their baby boomer counterparts. Roughly eight out of every 10 millennial homeowners surveyed said they plan to spend more money on home improvements in 2018-2019 than they did in 2017-2018.
Driving the movement to stay put and fix up rather than move out are some issues Colorado home seekers know all too well at this point: A lack of homes for sale (though a recent survey shows inventory growing in the Denver metro area) and correspondingly high costs of available homes, observers say.
“Mobility rates are ticking down and I think there are a variety of factors to that,” HomeAdvisor home expert Dan DiClerico said. “With the combination of home prices and interest rates ticking up, it just doesn’t make sense for people to move at this particular moment.”
Of the more than 1,000 homeowners who talked to HomeAdvisor this spring, 84 percent had no plans to move in the next 12 months. That comes despite half of all millennials saying that want to move to bigger or nicer homes.
“Now it’s millennials just as much as older Americans that are having to stay put,” DiClerico said. “That’s a function of inventory in many parts of the country; not being able to trade up because the homes just aren’t out there.”
With dozens of possible projects in every home, DiClerico has some recommendation on how homeowners can best invest their hard-earned dough to bump up their home’s value should the time to sell come.
The best place to start is the kitchen. Although the 2017-2018 survey found the average kitchen remodel cost $22,145, even a much cheaper update could significantly boost a home’s value. New appliances, counter tops and flooring can be had for a combined $4,000, DiClerico said, and raise a home’s value by thousands of dollars.
“A smart, cosmetic kitchen renovation makeover like that could raise a home’s value 5 percent,” he said.
For a $367,000 home, the median value in Colorado according to Zillow, that could mean an extra $18,000 and change.
Once the new fridge is humming and new kitchen counter tops have been buffed to a glossy shine, the next best way to boost a home’s value is by turning unfinished space into livable space. While he puts the average cost of finishing a basement at around $7,500, again DiClerico says a more thrifty remodeling project can have a significant impact on value. Start with upgrading the lighting if the basement is in decent shape already, DiClerico said.
“Depending on the current condition of the space, if it doesn’t need to be fully redone, you could be in and out for a couple of thousand dollars,” DiClerico said.
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When it comes to what sells a house, if it’s not the kitchen, it’s the bathrooms. It’s another area where the average renovation can be pricey — $9,742, according to the True Cost report — but a budget project can have an impact. Investing $2,500 in re-lining a shower or tub, updating the faucet and sink and installing new tile could provide a 2- to 3-percent boost in total home value, DiClerico said.
When it comes to doing something on the cheap or going whole hog, there is a judgement call to be made. DiClerico noted that a high-dollar kitchen renovation largely becomes sunk cost. Homeowners who invest $25,000 in their kitchens will not get all that money back at sale time, but if they’re in a home they love and plan to stay in long term, the focus shifts to the enjoyment they get out of the finished product.
At a time when home supply is lagging thousands of units short of demand in metro Denver, the home improvement industry isn’t just staying busy, it’s going bigger.
“One big trend we are seeing is the whole-house remodel,” said Patrick Condon, founder and president of the Finished Basement Company. “The family is moving out of the house, and we’re getting in and out of it and really giving them the home of their dreams.”
The Finished Basement Company handled design and project management services for more than 100 complex renovation projects in the Denver area last year, Condon said. For many people it comes down to loving the area where they live. He put the average cost of a whole-home overhaul between $150,000 to $250,000. Moving into a new home can cost upwards of $50,000 on its own, he added.
“You can change your house but you can’t change your neighborhood,” he said. “There are financial factors that come into it, but you can absolutely make any home your dream home.”
In Jefferson County, homeowner Kim McGrigg is now enjoying the home she bought last summer but could not live in it for the first six months she owned it. McGrigg and her husband bought a home in Genesee for $665,000 knowing it wasn’t exactly what they were after. They worked with the Finished Basement Company and invested $300,0000 in the property, living in an apartment in the meantime. The work included taking the kitchen down to the studs, splitting one large bathroom into two and lots of cosmetic updates.
“This was an opportunity for us to say, ‘We’re going to make this our house because we plan to live here for a long time,’ ” McGrigg said.
She has some advice for homeowners considering a project of this scale: Be patient.
“It’s hard to wait,” she said. “I was so excited about it, and it ended up being totally worth it.”
