Home improvement, or home renovation, is the process of remodeling or renovating a home. This can include changing the structure or appearance of a building, adding rooms or improving the energy efficiency of the home. Home improvements can also be DIY projects. Home improvement can be expensive, so it’s important to budget and plan your project well in advance. It’s also a good idea to get quotes from several contractors before beginning any work.
In addition to boosting home value, home renovations can make your house more livable and increase your comfort level. If you’re thinking about doing some home improvement, it’s important to understand the trends and what types of projects tend to deliver the best returns on investment.
NerdWallet’s experts analyzed the latest research to help you decide whether it makes sense to take on any home improvement projects, and how much you should spend on them. Our research also reveals the most common types of projects, how much homeowners are spending on them and which ones might not increase your home’s value.
According to the Joint Center for Housing Studies of Harvard University (JCHS), Americans spent a record-breaking $363 billion on home improvement in 2020 and an even more impressive $472 billion in 2021, which translates to about $1,350 per project. The majority of these improvements were paid for with cash from savings, although a higher percentage of the more expensive projects were paid for through sources like cash-out refinances, home equity loans and contractor-arranged financing. Credit cards were used for only 6% of the projects.
In general, the most popular home improvements were sparkling bathroom overhauls and basement remodels. These were followed by kitchen updates and exterior replacements. Interestingly, homeowners in their 50s and older were responsible for the highest share of renovation spending, while millennials were the least likely age group to undertake projects.
Despite the boom in home renovation, many homeowners are struggling to keep up with the increasing costs of materials and labor. Inflation has hit construction and remodeling jobs hard, especially with the ongoing shortage of skilled tradespeople. This can cause projects to drag on and cost more than expected.
Unless you’re planning on selling your home in the near future, it’s probably not worth investing in projects that won’t provide a great return on investment when it comes time to sell. In fact, you may end up with a house that doesn’t feel like your own if you renovate solely to boost the resale value. The best reason to remodel is to make your house more livable and enjoyable for you and your family.