Home improvement spending continues to trend upward, with the latest data from Harvard’s Joint Center for Housing Studies putting the aggregate total at a new high of $424 billion.
That’s up 10% from 2015 and a whopping 50% from 2010’s low.
The home improvement sector can thank the Baby Boomers for that.
According to the report, older homeowners are spending big on home renovations. Not only does this demographic have a high rate of homeownership, they also have the resources to pay for renovations, the study said.
“Homeowners age 55 and over have dominated the home remodeling market for nearly a decade, overtaking middle-aged owners as the primary source of home improvement spending,” the report notes. “Older homeowners are living longer and are increasingly willing and able to spend for home improvements that allow them to remain safely in their current homes.”
In fact, spending among older owners grew more than 150% to $117 billion in the last two years, the report noted, fueled by an increase in the number of older owners and an uptick in the amount they’re spending to improve their homes.
That means that households age 55 and over accounted for half of all home improvement spending nationwide.
And, the researchers said they don’t expect this trend to slow down anytime soon.
“As members of the Baby Boom generation age into their 70s and 80s, investments in home modifications to improve accessibility are expected to soar,” they wrote.
How are they financing these renovations?
Cash from savings remains the most common source of financing, followed by home equity loans, lines of credit and cash-out refinancing.
The researchers note homeowners are more likely to tap into their home equity to finance costlier projects, and when equity is tapped, they often end up spending more.
“Offering homeowners additional financing options could be a promising growth opportunity for the remodeling industry,” the study states. “Owners’ heavy reliance on cash savings to fund improvement projects limits the amount they are able to spend.”
“As a result, expanding the types and availability of new financing alternatives – especially those tied to home equity – would likely lead to significantly stronger growth in improvement expenditures while at the same time help preserve and modernize the nation’s housing stock,” they conclude.