October 11th, 2019 2:48 AM by Eric Willner
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Eighty percent of homeowners anticipate taking on a home improvement and renovation project in the next year, and more than 70% of that group plans to do the work themselves, according to a new survey from Chase Home Lending. The top motivators for sprucing up a home include adding value to the property, creating a comfortable space for family and entertainment, and accommodating a DIY hobby, the survey of 1,000 homeowners found.
Home Improvement Projects That Make Homeowners Happier
“More and more, homeowners are taking matters into their own hands by doing the work themselves,” says Amy Bonitatibus, chief marketing and communications officer for Chase Home Lending. “While cash is still king, we are seeing an increase in the number of people who are taking advantage of the recent drop in rates and paying for their home improvement and renovations by tapping into the equity in their home.”
About 58% of respondents say they plan to spend up to $10,000 on their home improvement and renovation or remodeling project; 21% intend to spend $10,000 to $25,000; and 21% say they will spend at least $25,000. Many homeowners say they plan to use a mix of cash, savings, credit cards, and home equity lines of credit or a cash-out refinance to pay for their updates.
Chase teamed with Drew and Jonathan Scott, hosts of TV’s “Property Brothers,” to conduct the survey. “Elevating your property from a house to a home can be within reach,” says Drew Scott. “Whether it’s sprucing up your outdoor deck or updating your kitchen with a trendy tile backsplash, selecting the right projects can create long-term value and make your property more attractive for future buyers.”
Concerns over personal finances are giving some home buyers the jitters even as lower mortgage rates are boosting affordability, a new consumer index from Fannie Mae finds. Consumer sentiment in housing dropped in September from August’s high, the index found.
More respondents believe now is a good time to buy and sell a home, but there was a notable drop in the share of consumers who said they were not concerned about losing their jobs. This is leading to more Home Improvement and Renovations.
Overall, Fannie Mae’s consumer sentiment index on the housing market fell in September by 2.3 points to a reading of 91.5. Still, it is 3.8 points higher compared to a year ago.
“Consumer sentiment remains relatively strong overall, though uncertainty about the economy and individual financial circumstances appear to be weighing on housing market attitudes a bit more than a month ago,” says Doug Duncan, Fannie Mae’s chief economist. “Consumers who are pessimistic about current housing market conditions are more likely to cite unfavorable economic conditions than the prior month. Job confidence remains high but still well shy of its July reading.”
The share of consumers who say their household income is significantly higher than it was a year ago was at 21% in the September survey.
More consumers do believe now is a better time to buy rather than sell. This is leading to more Home Improvement and Renovations, instead of trading up. Lower mortgage rates are helping to spread that attitude. Because of lower mortgage rates, average monthly payment on an average priced home is 10% lower than it was last November when mortgage rates were nearing 5%, Black Knight reports. Lower mortgage rates are allowing buyers to purchase a home that costs $46,000 more and pay the same monthly payment as they would have compared to last November, Black Knight data shows. Home prices are still rising, but they are moderating.
“Back in November 2018, we were reporting on home affordability hitting a nine-year low,” says Black Knight Data & Analytics President Ben Graboske. “Interest rates were nearing 5%, pushing the share of national median income required to make the principal and interest (P&I) payments on the purchase of the average-priced home to 23.7%. While still below long-term averages, that made housing the least affordable it had been since 2009, spurring a noticeable and extended slowdown in home price growth.”
Here are some additional findings from Fannie Mae’s latest consumer housing survey taken in September:
“Confidence in Housing Weakens Just as Homes Become More Affordable,” CNBC (Oct. 7, 2019); Fannie Mae; and Black Knight Inc.
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