Home improvement is anything that adds value to your home, such as remodeling or adding rooms, landscaping, painting, paving and more. However, not all home improvements are created equal. Some have much better return on investment than others, so it’s important to research which projects are worth the time and money.
Certain things are inevitable in life: death, taxes and if you’re a homeowner, home repair and improvement projects. These aren’t always fun, but they’re a part of owning a property.
In fact, homeowners reported spending $522 billion on home improvements last year, according to NerdWallet. Of that amount, owners 55 and older were responsible for the bulk of the spending with over 50 percent of total market share.
Many of the same trends that characterized overall market activity also shaped home improvement spending. In particular, higher housing prices have fueled homeowner equity and made it easier to borrow money for renovations. Additionally, aging baby boomers have made up a larger proportion of the housing population and have the resources to take on more expensive renovation projects.
While the home improvement industry peaked in 2022, it’s not all doom and gloom. In fact, the home improvement sector continues to thrive despite a number of hurdles that are affecting the real estate market. The biggest factors in home improvement spending are construction labor costs, interest rates and material pricing, all of which have increased significantly over the past several years.
Other factors that impact home improvement spending include homeowner confidence and local demand. The latter can vary widely by region, so it’s important to understand what your local market is looking for in terms of specific improvements. For example, some projects will not appeal to buyers if they’re too personalized or out of character with the rest of the neighborhood. Likewise, some technologies depreciate over time, so a new air conditioning system may not be as attractive to potential buyers five or ten years down the road.
The best way to ensure you’re making the most of your home improvement investment is to work with a contractor that offers transparent and competitive pricing for your project. A good contractor will be licensed and insured, as well as have a solid track record of customer satisfaction.
If you aren’t sure where to start, NerdWallet has tools that can help you understand how much popular projects cost and their return on investment. We’ll also show you how to save on your home improvement project by making smart choices about materials and contractors. You can also use our tools to find the most competitive service providers near you and request free estimates from vetted contractors. Just be sure to ask for business references and check their license before hiring any contractor. Also, remember to always practice safe DIY when working on any type of project.