Home improvement is an industry that consists of the retail sale of building materials and appliances, as well as home renovations and repair services performed by contractors, tradespeople and other professionals. In addition, it includes the sales of furniture and decorations for interior and exterior spaces. The growth of this industry has been spurred by consumers’ increased spending during the COVID-19 pandemic on projects to make their homes more comfortable, functional and attractive.
According to Census Bureau data, homeowners spent $522 billion on home improvements during the two years ending March 2019, completing an estimated 115 million projects. That’s a $72 billion increase in spending from the previous two-year period. Interestingly, while homeowners were spending more time at home during the pandemic and focusing on projects to make their home more comfortable, they were less likely to hire professionals to help with those tasks. Only about 3 in 5 homeowners hired home repair or improvement specialists during the pandemic, compared to 4 in 10 during the previous two-year period.
When choosing a contractor, you should always get a written contract that specifies the work to be done, the price and the payment schedule. The contract should also include a mandatory arbitration clause, details about any warranty for the work and materials and the name of the person or organization that will administer the arbitration process. It should also disclose whether any mandatory fees will be charged for the use of the arbitration service and a fee schedule. It should be signed by both parties.
Some common home improvements are kitchen remodels, bath upgrades and adding square footage with the construction of an addition. While these are popular with homeowners, they may not always increase a home’s value.
A poorly designed or executed home renovation could actually decrease the value of a house, and that’s why it’s important to talk with a real estate professional before beginning any project. They can offer advice on what renovations will appeal to the widest possible range of prospective buyers and which ones are best for boosting a home’s resale value.
It’s a good idea to focus on upgrades that are more universally appealing, rather than customizing your home so it will stand out in the neighborhood. For example, a swimming pool will only add value to your home if it’s in keeping with the neighborhood’s style and scale.
A well-chosen, low-cost home improvement can increase your home’s comfort, resale value and curb appeal. Sticking to a budget is key, and that requires accurately estimating the costs of the project at the beginning and factoring in a 10%-20% buffer for unexpected expenses that can pop up during a home improvement project. A professional contractor should be able to help with this, especially with an online tool that helps determine the cost of specific home improvement projects. And remember, never go into debt to finance a home improvement project. Not only will you end up paying more for your home, but the extra interest charges can significantly reduce the return on your investment.