Home improvement is a popular pastime for many homeowners. They do it to keep their homes up to date, increase resale value or make it more comfortable for their families. But it’s important to consider your budget before committing to any major renovation. If you don’t, you may find yourself spending more than you can afford and possibly going into debt.
There has been a spike in home improvements since the pandemic, according to the National Association of Realtors. Professional contractors have seen a decline, but do-it-yourself projects have skyrocketed as homeowners stay home and want to make the most of their entertaining and work-from-home space.
Those aged 55 and older have been driving the growth of the home improvement market, making up more than half of all homeowners who reported spending on renovations. They spent an average of $5,400 on improvements.
Some of the most popular improvements include kitchen remodels, bathroom upgrades, adding new rooms and installing a deck or fence. However, not all renovations are created equal when it comes to resale value. Some will actually cost you money in the long run, and some will not add as much value to your home as others.
One big mistake many people make is choosing high-end materials and finishes without a realistic budget in mind. It’s easy to get sucked into the excitement of planning a project and getting started, but remember that you will be paying for these upgrades long after the initial construction phase has ended. A good rule of thumb is to have a 10%-20% buffer to cover costs that are unexpected or go over budget.
If you are thinking of starting a new project, it’s helpful to consult with a real estate pro before committing to anything major. They can offer guidance on what renovations are likely to boost your resale value, and help you determine the best way to pay for them. It’s also a good idea to talk to your insurance agent about your renovations to make sure that your existing policy offers adequate coverage.
Whether you are a DIYer or you hire a contractor, it’s always a good idea to make sure that your business is licensed by your local city and county. It’s illegal in most cities and states to engage in home improvement activities without a license, and you could face fines or even jail time.
In 2023, JCHS predicts that home improvement revenue will continue to grow. But that growth is expected to slow, due to stalled housing markets and rising labor costs.
If you are planning on a home improvement, it’s important to plan your budget carefully and weigh your financing options before diving in. A loan calculator can help you determine how much your project will cost and how long it will take to pay off, and a home improvement financing guide can walk you through the process of exploring your options. You should also consider your credit history, how much equity you have in your home and your financial situation before making a decision about how to finance your project.