Aging inventory, rising home values and an improving economy are all fueling more homeowners to sink money into their homes across the nation. According to The Demand Institute, homeowners across the country will spend more than $700 billion in renovating their current homes during the next five years.
However, a few markets stand out for homeowners looking to update their properties. “The [renovation] market is exploding all across the country. We’ve seen an increase in homeowners renovating their properties,” said Richardson, HomeStyle program specialist at 5-Star Lender American Financial Resources (AFR). “ However, you do have your seasonal places that do well all year long.”
Richardson added that during the winter, homeowners typically work on interior updates or they travel South to warmer areas where their vacation and investment properties are typically located.
The 203k and HomeStyle loan programs enable home buyers to buy and fix up a property without exhausting their personal savings. Instead, they can purchase a property and tie in whatever costs to make required repairs or desired updates to one 30-year fixed loan.
Below are three areas primed for home renovation:
: According to Remodeling’s 2014 Cost vs Value Report
, San Jose, San Diego and San Francisco are among the top cities where homeowners can get the most return for renovations. San Francisco shows a cost-value ratio of 109.4% for homeowners, making it the second most profitable city for home renovations. The ratio expresses resale value as a percentage of construction cost.
The sunny state is home to many vacation properties, particularly in the Miami Beach area, according to Richardson and because of its year-round warm weather, renovations tend to happen no matter the season. Fort Meyers ranked no. 6 on Remodeling’s most profitable city list for home renovations.
According to the National Association of Home Builder (NAHB), the South featured the highest remodeling market index during the third quarter at 62. In particular, the city of Austin ranks no. 6 on Remodeling’s most profitable city list for home renovations. After updates, home owners typically recoup 81.3% of their remodeling costs in the Texan city.
Richardson added that the renovation loans in the Midwest in states like Illinois, Ohio and Indiana are also gaining steam.