As U.S. News reports, mortgage rates have climbed and talk of economic downturn ramps up, so homeowners who waited to sell might now find themselves in a quandary as the scorching hot real estate market finally starts to cool.
Mischa Fisher, Chief Economist at home services company Angi, says that all-time high property prices have made many homeowners decide to stay put and renovate instead of buy a new home. But is spending money on home improvements a wise move right now, especially with rising costs due to inflation and a still-burdened supply chain?
The simple answer is yes, though the nature of the projects should depend on whether you plan to stay in your home for years or are looking to sell soon, according to Fisher. “Ultimately, homeowners should focus on making their homes work for their current needs, but it doesn’t hurt to pick projects that add value,” Fisher says.
Keith Liston, president of Liston Design Build, has been remodeling homes in St. Charles County and St. Louis, Missouri, since 1984. “We’ve certainly seen the ups and downs in the economy, but our experience is the remodeling activity doesn’t really slow down,” Liston says. “People just make smarter decisions and don’t go too lavishly with some of their choices.”
According to U.S. News, this makes remodeling a recession-resistant industry because the jobs are still coming in, though they might be smaller. However, Liston says homeowners are paying more for everything. The normal cost of living increase for materials is about 5% every year, but Liston has seen almost a 20% increase each year recently for cabinets, appliances and flooring. Fuel surcharges have been added to most purchases, he says. He notes that the prices for raw goods like lumber are volatile, but they have mainly been on the upswing during the pandemic.
It’s worth noting that while some tasks might seem too labor-intensive if you’re getting ready to sell a home, it could be worth it at resale. For example, according to the 2022 Remodeling Impact Report from the National Association of Realtors, homeowners might expect a whopping 147% cost recovery from refinishing floors and 118% from installing new wood flooring.
“As long as homes are holding their value, it usually gives people comfort that they should invest in the house,” Liston says.
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