The expected tenure of homeowners in a home continues to increase, according to the latest Profile of Home Buyers and Sellers. Last year, the expected tenure was 12 years - this year, it jumped to 15. And, with tightened inventory in many markets, people are staying put in their homes for longer. As a result, remodeling one’s current home is an increasingly popular option for those who want their dream home, but are unable or unwilling to move.
The 2017 Remodeling Impact report shows that remodeling can bring more enjoyment to a home and that certain projects have high returns both in terms of the joy they bring to the homeowner, as well as the number of expenses that are recouped when the home is sold.
The projects that yield the most joy and recoup the most expenses might come as a surprise. According to REALTOR respondents, the number one project is a complete kitchen renovation. The top reason homeowners renovate the kitchen is for better functionality and livability, according to 44 percent of respondents. When the project is completed, 91 percent of respondents have both a greater desire to be at home and a greater sense of enjoyment when they are at home. Overall, a kitchen renovation receives a 10 out of 10 Joy Score, and REALTORS estimate that $40,000 of the cost can be recovered at resale - approximately 62 percent of the estimated cost.
The second-most popular project is a kitchen upgrade. Like the complete kitchen renovation, upgrading worn-out surfaces, finishes, and materials is high on the list of reasons to undertake the project – in fact, it’s the number one reason, at 42 percent. When the project is completed, 81 percent report experiencing a greater desire to be in the home and feeling a major sense of accomplishment when they think about the project. Slightly fewer have an increased sense of enjoyment when they are in the home at 76 percent, but the project overall has a Joy Score of 9.6 out of 10. REALTORS estimate that $20,000 of the cost can be recovered at resale - 57 percent of the estimated cost.
The third project on the list of most popular projects is a bathroom renovation. Forty percent undertake the project for better functionality and livability, while 38 percent want to upgrade worn-out surfaces, finishes, and materials. When the project is completed, 78 percent feel a major sense of accomplishment when they think about the project. The project has a Joy Score of 9.6 out of 10, and REALTORS estimates that $15,000 of the cost can be recovered at resale - 50 percent of the estimated cost.
Rising home prices are standing in the way of millennials who want to buy their first home; however, these challenges are being overcome via some unconventional methods. Millennials are getting creative and finding sources for their down payment by any means necessary. But are these methods hurting the millennial generation financially?
Borrowing from family: Sure, gifted money doesn't sound bad. But what if the families don't have the cash to give? Instead, buyers are asking that their parents' home be refinanced, using the home equity as a way to fund their own home purchase.
Of course, this can be beneficial in multiple-offer situations to get a competitive edge with an all-cash offer, but borrowing from a relative can go south fast. Not being able to pay a bank back can have repercussions like lowering a credit score, but missed payments to a relative can damage familial relations. Is it worth the risk?
Crowdfunding: There are new crowdfunding platforms being introduced every year, and more of them are tapping into the real estate industry. This can be a great way to amass gifted money from friends and family, but not everyone may see it that way. Instead of crowdfunding for their honeymoon, newlyweds are asking their wedding guests to donate toward their first home.
This method can get complicated in the lending world. Buyers will need to look into gifting regulations before accepting any gifted money.
