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Will renovation spending offset drop in construction spending?

Two-thirds of homeowners plan renovation in rest of 2014

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After the biggest drop in construction spending since January 2011, contractors may find some relief in the finding that 67% of consumers plan home renovations within the next six months, according to the latest realtor.com home improvement survey.

Construction spending in June came in at a seasonally adjusted annual rate of $950.2 billion, down 1.8% from the revised May estimate of $967.8 billion.

The good news is that more two-thirds of the more than 1,500 visitors to realtor.com from May 19-29, 2014, who to the survey say they plan to renovate an area of their homes immediately, and 20% of those surveyed plan to list their homes for sale before the end of 2014.

Similar to last year, the most common budget range for home improvements is between $2,001 and $5,000.

Fully 18% of those planning to renovate before the end of the year expect to spend between $10,000 and $20,000, the survey found.

Home owners are most likely to spend that money remodeling kitchens, bathrooms, backyards or patios. The top reasons for the remodeling are greater enjoyment of the home and improved appearance, according to the survey.

"With 32 percent of consumers planning to spend money on improving the look and feel of their homes, home buyers should think about purchasing homes that require renovations," said Barbara O'Connor, chief marketing officer for Move (MOVE) which operates realtor.com. "By considering these kinds of homes, buyers open themselves up to more affordable options and the ability to renovate their homes to fit their specific needs and tastes."

Most popular reasons for planned home improvements:

  • 32% - To improve the aesthetics and/or enjoyment of the home;          
  • 22% - In preparation for putting house on the market;              
  • 19% - Recently purchased a home needing renovations; and
  • 11% - To improve the value of the home.

Most popular areas of the home to improve:

  • 61% - Kitchen;
  • 59% - Bathroom(s);    
  • 33% - Backyard/patio; and
  • 32% - Exterior of the home.

Range of home improvement budgets for the next six months:

  • 22% - $2,001 - $5,000;
  • 19% - $5,001 - $10,000;
  • 18% - $10,001 - $20,000; and
  • 14% - $20,001 - $50,000. 

Range of home improvement budgets in 2013:

  • 20% - $2,001- $5,000;                                                                      
  • 13% - Up to $500;
  • 11% - $501 - $1,000; and
  • 11% - $1,001 - $2,000.

When do they plan to sell their home?

  • 37% - Not any time in the foreseeable future;
  • 20% - 0 - 6 months;                                                   
  • 19% - 1 - 3 years; and
  • 10% - 4 - 6 years.

Ages of survey respondents:

  • 28% - 45 – 54;
  • 26% - 55 – 64;
  • 19% - 35 – 44; and
  • 13% - 22 – 34.

Geographic location:

  • 25% - Southeast;
  • 22% - Midwest;
  • 22% - Northeast;
  • 17% - West; and
  • 13% - Southwest.

Income ranges:

  • 20% - $100,001 – $200,000;
  • 17% - $70,001 – $100,000; and        
  • 13% - $50,001 – $70,000.     

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