Most of the United States is currently in a strong seller's housing market, so strong that many people are caught up in bidding wars -- and losing. If you've been trying but haven't been able to buy a move-in ready home lately, or if you don't want to sell for fear of not being able to obtain a replacement home, one obvious choice is to remodel a fixer-upper or update the home you already own. Data suggests that's exactly what we'll be seeing more of in 2021.
Harvard University's Joint Center for Housing Studies through its Leading Indicator of Remodeling Activity (LIRA) follows home improvement trends. LIRA projects the remodeling industry will be an astounding $352 billion strong in 2021, up even from 2020's impressive $339 billion. This is up significantly from $290 billion in 2017.
Factors that point to remodeling
The usual indicators for remodeling activity are home-price appreciation, existing home sales, and age of housing stock. All three indicators predict a strong 2021, but another huge factor that contributed to the remodeling trend has been the coronavirus. In fact, the remodeling and home improvements industries enjoyed bigger gains than any other industry because of the pandemic, mainly due to people spending so much time at home.
Cities predicted to have the most remodeling activity
You can look at national trends in real estate, but if you want a true real estate picture, you need to drill down to local markets. The same goes for remodeling and renovations.
The three largest cities -- New York, Los Angeles, and Chicago -- will see more remodeling projects at 9% or 10% growth but will probably not be experiencing as much remodeling activity as some other U.S. cities.
For example, the forecast for Austin, Texas; and Naples, Sarasota, and Fort Myers, Florida, is 30% or more growth in spending dollars for remodeling. Cities predicted to have 25% or more growth in remodeling spending are Nashville, Tennessee; Fort Worth, Houston, and Dallas Texas; and Raleigh, North Carolina.
We've established that remodeling will continue to be big business in 2021. But what exactly will be done? Whether it's for your primary home, your rental, or your flip, here are the trendiest ways of making the most of remodeling bucks.
Since the pandemic kept many Americans home more, people started thinking of how they want to use their space. If that guest bedroom rarely houses overnight visitors, why not convert it to an arcade, a home gym, or of course, an office? Other requests designers are seeing are for indoor bowling lanes, home theaters, full bars, and climbing walls. This trend is more for a primary home remodel than an investment property because this renovation is tailor-made for a particular household.
People are increasingly redesigning their homes for two families. This could be in the form of two master suites instead of one, two kitchens, or building an accessory dwelling unit (ADU) or tiny home on the property.
Anything that makes the home friendlier to the environment will be a popular upgrade. Think things like better insulation, an upgraded HVAC system, solar power, and rainwater harvesting.
De-stressing in the bathroom isn't a new concept. An old advertisement from the 1970s and 1980s featured a stressed out woman calling for Calgon bath-oil beads to take her away. Today, people still look to a nice soak in the tub to relax, but they want the whole Zen bathroom experience, and that requires a spa-like atmosphere with huge soaking bathtubs and steam showers.
The Millionacres bottom line
If you've been thinking of upgrading investment property, look at your competition. People in desirable markets are expecting a more modern and comfortable home. You might want to think about budgeting for remodeling projects this year to stay relevant in your market.