Her three daughters were grown. Her husband died two years ago. The circa 1978 tri-level in southeast Aurora was more house than she needed. And the scorching metro real estate market just begged her to cash out.
For Debby Pilloud, the next move seemed obvious: Capitalize on her equity and downsize to a less-pricey condo.
But like more and more homeowners, Pilloud pumped the brakes, stayed put and invested in some overdue home improvements.
“It’s all paid off, so I just want to get it updated,” Pilloud said. “So in the future, if something were to happen where I die or get sick, and the kids need to sell, it’s taken care of.”
And in the meantime, she enjoys the benefits of the remodel, which so far has revamped her master bathroom — “It’s gorgeous,” Pilloud said. She has just gotten the estimate to refurbish the main floor powder room and has plans to update a third bathroom.
It’s a trend that has played out with increasing frequency not only in the metro area, but across the country and especially in the western U.S. Homeowners undertook more home projects in the period of February 2016-17 than in the previous year, and spent about $1,850 more, on average, according to HomeAdvisor’s 2017 True Cost survey.
There’s also a generational dynamic at work: baby boomers led the remodeling charge, followed by millennials. But the boomers were more likely to hire out the upgrades, while the younger generation leaned toward doing it themselves.
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In addition to that, notes HomeAdvisor chief economist Brad Hunter, millennials are more likely to stay and increase their home improvement spending. And they have some favorite projects, like finished basements, which they’re twice as likely to take on as are boomers.
“My hypothesis around that is they may have bought a small starter home a couple years ago, and it has gone up in value, so they tap into their equity and add space in a home that they’re already outgrowing,” Hunter said.
Plus, millennials are finally “coupling up,” he added, and having children at a higher rate.
“That was a question hanging over the demographic community,” Hunter said. “Are they ever going to settle down? They’re just doing it later.”
Homeowners who have lived in their homes fewer than six years or more than 11 years spent the most on home projects, while those in that middle ground spent the least. Data revealed those in the West and Northeast to be the biggest spenders, often taking advantage of high home equity to tap into loans for the improvements.
Hunter sees that as a huge driver of home remodels.
“We’ve seen double the average equity in the Denver market in the last five years,” he said. “That has a few effects on people. One, it makes them more confident because they feel richer. Two, it gives them better access to funding they might need, whether they take out a home equity loan or line of credit, or just dip into savings.
“It all goes back to being more confident. If they dip into savings, but know they have the paper wealth, they’re more prone to do it.”
Even if homeowners do cash out to take advantage of equity and the sellers’ market, they can run into trouble trying to find something comparable if they choose to remain in the area. And good luck trying to upgrade, unless they have extra cash or want to take out another mortgage.
Orley Paxton, owner of Handyman Hub that connects homeowners with the right contractors, and who launched Pilloud on her bathroom remodels, said that improvements tend to be the more cost effective course for those looking to remain in the Denver-area market.
“If you sell, and you want an upgrade, you’re buying into an expensive housing market as well, so you’re not going to get a lot,” he said. “We’re finding that, as prices continue to escalate, you can spend $15-20,000 on a couple of bathrooms and you’ve got a nice house again and can enjoy it.”
Statistics on new home starts — including condos and townhomes — in metro Denver put those who would cash out and move in a similar quandary. Fewer than 1 percent of starts in this year’s first quarter were below $300,000, compared to 3 percent in 2017, according to Metrostudy, a home construction tracker.
And only 22 percent were priced under $400,000, roughly half the percentage of two years ago.
Recently, bathroom re-dos passed kitchens as the most common home improvement project, according to a survey by the National Association of Home Builders.
