With mortgage interest rates expected to remain elevated in 2025, and inventory still scarce, most current homeowners in a recent survey preferred to renovate rather than move.
Nearly all, or 93%, of those who responded to the poll conducted by home renovations facilitator Angi between Nov. 8 and Nov. 18, said they planned to perform some sort of renovation project this year.
High mortgage rates were a concern even then, as the poll was taken before the Freddie Mac Primary Mortgage Market Survey briefly crossed back above the 7% level. It also was before Fannie Mae came out with more bearish forecasts in December and January.
A majority of respondents, 65%, said it was cheaper to buy a home instead of renting, with 35% declaring it was the opposite. Only 4% said homeownership is not worth it given the costs of maintaining their residence.
“Even as economic pressures and challenges to getting projects done mount, the desire to create functional, personalized, and well-maintained spaces is stronger than ever,” said Angie Hicks, co-founder of Angi, in a press release. “The optimism for 2025 reflects the enduring value of homeownership as both a financial and emotional investment.”
During 2025, those that are planning renovation work are looking at routine maintenance (36%), interior painting (22%), bathroom remodels (13%), flooring installations (13%) and new landscaping (12%). Respondents could provide more than one answer.
Longer-term, over the next five years, a kitchen remodel is on the boards for 31% of those surveyed, followed by a bathroom remodel at 28%.
But of course, these projects need to be paid for. Younger homeowners are more likely to budget than prior generations and while 63% of those between 18 and 44 said they are actively saving for upcoming projects, they are also more likely to explore what Angi terms “alternative financing options,” such as using credit cards or refinancing an existing loan (the type of loan was not specified in the report).
At the other end of the spectrum, those 65 and older are less likely to save for a project, at 49%. Nearly one-third of this group has not thought about budgeting at all.
But 46% of the baby boomers and 60% of the silent generation are not at all interested in financing their projects, preferring to rely on their savings, likely from the nest egg they have built up over the years.
In 2024, home project spending was down by 12% as those doing renovations focused on essential work, upkeep and lifestyle-enhancing upgrades over discretionary improvements.
They averaged $12,050 on projects last year, down from $13,667 in 2023.
The Joint Center for Housing Studies of Harvard University put out its own report on Jan. 16. It expects that after two years of spending declines, “annual expenditures for improvements and maintenance to owner-occupied homes are expected to grow at a mild pace throughout 2025,” its Leading Indicator of Remodeling Activity said.
“A solid labor market, rising home values, and continued improvement in existing home sales are supporting greater activity in home remodeling and repair,” said Carlos Martín, director of the Remodeling Futures Program at the Center, in a press release.
“Upward trending retail sales of building materials and steady permitting for remodeling indicate that homeowners are slowly but surely expanding the pace and scope of projects compared to the last couple years.”
Using new benchmark data from the American Housing Survey, the Center increased its projection for the size of the remodeling market this year by $30 billion, or 6.4%, to $509 billion.
The average American homeowner spends $24,529 a year on costs beyond their mortgage payment, including $6,087 on maintenance and repairs, and $5,762 on renovations, Clever Real Estate found.
Almost half of those Clever surveyed, 46%, said they don’t actively budget for unexpected repairs. As a result, 20% of homeowners have gone over a year without fixing major home issues due to financial constraints.
Among first-time owners, 53% said they cannot afford to make major home renovations right now; that drops to 39% for repeat owners.
The Clever/Real Estate Witch survey was conducted between Nov. 27 and 30.
