More American homeowners are choosing to stay in their current home and invest money on its improvement according to a new Nerdwallet report.
An analysis of 2,001 adults including 1,353 homeowners, reveals that 85% believe their home is their biggest investment. And US Census Bureau data shows they invested almost $450 billion to improve their homes between 2015 and 2017.
Calum Lewis, Nerdwallet’s home expert, says that this stay-and-invest trend reflects a change in behaviour.
“Typically, renovations happen just before or just after a home is sold. Now, a shortage of affordable homes and higher mortgage rates mean people are staying in their current homes longer,” he notes.
With mortgage rates rising over the past two years, those homeowners that are locked into low rates are not keen to sell their current home and face higher rates. So they are fixing-up instead.
“This, paired with first-time homeowners buying homes in need of renovations — because that’s what’s available — seems to be driving a lot of home improvement spending,” adds Lewis.
Unprepared for repairs
Despite the quest to invest in their homes, the Nerdwallet report shows that 3 in 10 homeowners don’t have the money to carry out repairs.
However, 56% of homeowners indicated they would be willing to borrow from friends or family for home repairs, and more than a third (37%) would tap retirement funds for a major repair or improvement.
But less than half said they would explore HELOCs (48%), home equity loans (46%), or a refinance mortgage (37%).