Baby boomers expected to lead remodeling over next decade

For the past two decades, baby boomers have been the leaders in renovation spending.

According to the Demographic Change and the Remodeling Outlook, it looks like they aren’t backing down any time soon. Renovations by homeowners 55 and older are expected to increase by nearly one-third in the next decade (by 2025), representing more than 75 percent of total gains.

In 2025, baby boomers are expected to represent 56 percent of all renovation spending, up from 31 percent in 2005. Generation X members are expected to finally do the remodeling they have put off, due to the economy, and millennials are also expected to pour some money into renovations in their newly-purchased homes. Remodeling is expected to grow about 2 percent each year until 2025, the report found. In 2015, homeowner remodeling hit $340 billion, a new high.

“With national house prices rising sufficiently to help owners rebuild home equity lost during the downturn, and with both household incomes and existing home sales on the rise, we expect to see continued growth in the home improvement market,” says Kermit Baker, director of the Remodeling Futures Program at the Joint Center for Housing Studies.

The study said that rising home prices are leading owners to update their homes, but this could be making these homes even pricier when they do hit the market. Baby boomers are most likely to update their homes to be more accessible, while millennials are updating for energy efficiency and automation.

“The remodeling industry should see numerous growth opportunities over the next decade,” says Chris Herbert, managing director of the Joint Center for Housing Studies. “Strong demand for rental housing has opened up that segment to a new wave of capital investment, and the shortage of affordable housing in much of the country makes the stock of older homes an attractive option for buyers willing to in invest in upgrades.”

What remodeling projects give homeowners the most resale value?

Of the 29 home projects in Remodeling Magazine’s annual Cost vs. Value Report, for resale purposes, the average return on investment is 64.3 cents to the dollar.

“Greige,” described as Remodeling Magazine as being a mix of gray and beige is THE color this year, thanks to its subtly.

Of the 29 projects in this year’s report, 24 have been monitored since 2011, and have seen an increase of only three-quarters of a penny for resale value since the 2016 report. However, the average cost for these projects increased 3 percent.

The project that gives homeowners the most bang for their buck in resale value is loose-full insulation in an attic, which is the only project that costs less than its’ resale, at 107.7 percent. The average cost is $1,343, while the average resale value is $1,446. A steel door replacement is second, with a 90.7 percent resale value, costing, on average, $1,413, with an average resale value of $1,2,82. A manufactured stone veneer comes in at 89.4 percent in third, costing $7,851 on average, with a resale value of $7,019. Rounding out the top five are the minor kitchen remodel (80.2 percent return on investment) and a garage door replacement (76.9 percent return on investment). Remodeling Magazine pointed out that these projects are generally some of the most inexpensive ones that homeowners can complete.

The projects with the lowest resales include a bathroom addition, which costs, on average, $43,232, but has an average resale value of $23,283 (53.9 percent) a backup power generator, which only has a resale value of 54 percent, from the cost of $12,860 to a resale value of $6,940, and a backyard patio, which costs homeowners an average of $51,985, with a resale value of $28,546, or 54.9 percent. Rounding out the bottom five are the bathroom remodel, which costs, on average, $18,546, but only sees a resale value of $12,024 (64.8 percent) a master suite addition, which costs $119,533 on average, with a resale value of $77,506 (64.8 percent).

In 2017, it is expected that remodeling projects will increase 4.4 percent, and then 3.3 percent in 2018.