Very low inventory is straining the housing market, but experts say the ongoing boom in home remodeling may be making it worse, at least for now.
During the lockdown and throughout covid, spending on home improvement and repairs have grown substantially as households modify their living spaces for work, school and leisure. And if homeowners are not selling, there is not enough supply for the buyer’s demand, also making it difficult for owners to move up or down to the next house.
All of a sudden, millennials who were having a tough time saving the down payment now have more personal wealth, thanks to some Covid-19 relief packages. With interest rates at historic lows, they have purchased properties they could not qualify for previously. Also, the ongoing wave of senior homeowners are deciding to “age in place” and making the repairs and adjustments to their homes that allow them to do so.
Many professional remodeling projects came to a halt when the pandemic hit while do-it-yourself (DIY) renovations surged. It was a natural instinct for homeowners to dive into the things that needed to be done and they never had time for. Remodeling projects are the answer for many, but making sure the proper permits are filed is very important, especially for a future resale. Projects that don’t affect anything structurally usually do not need one. But always check the local building codes about restrictions.
Fixing and maintaining older, affordable homes is an important trend to keep the housing market strong. And buyers’ expectations have increased with the current TV shows about home remodeling. Remodeling a home or upgrading baths or kitchens will attract consumers later for a faster sale.
Yes, there is a current shortage of 3 million homes based on historical averages. But while these remodeled homes may not hit the market immediately, it is an indication that some homeowners may be preparing for sales down the line. As in every real estate market, inventory ebbs and flows, and given some time, it will once again be a “buyer’s market.”