More than half (58%) of homeowners are planning to spend money on home improvement projects in 2018, according to the fifth annual LightStream Home Improvement Survey. LightStream is the national online lending division of SunTrust Banks, Inc. (NYSE: STI).
Budgets for renovations are on the rise: among homeowners planning renovations, 45% will spend $5,000 or more — an all-time survey high. Those planning to spend $35,000 or more doubled from 2017.
The survey shows robust enthusiasm for renovation, as well as a thoughtful desire to balance a home's needs and the homeowners' budget, so they have the financial confidence to move forward. Specifically, the survey revealed the following trends:
• Home "Sweat" Home: The majority of homeowners plan to invest sweat equity, as 65% say they'll do at least some of the work themselves. The 18-34 group is particularly fond of do-it-yourself projects, with 70% planning to work on at least a portion of their renovation.
• Love of the Outdoors: The popularity of outdoor improvements remains strong. Projects such as decks, patios and landscaping rank at the top of the list for the fifth year in a row (43%), up five% over 2017. Nearly a third (31%) of homeowners will tackle a bathroom remodel; more than one in four (26%) will redo a kitchen.
• Staying — and Aging — in Place: Only seven% of homeowners are renovating to prepare their homes to be sold, the lowest%age since 2015. Instead, 14% of homeowners across all age groups — not just baby boomers — are citing "aging in place" as a reason for making a home improvement. Even respondents aged 18 to 34 (11%) and 35 to 44 (10%) say they're renovating "to prepare my home so I can stay in it as I get older."
• Tax Reform Boosting Budgets: With recent passage of tax reform, homeowners have already begun calculating how the changes might affect what they spend on home improvements. One in four homeowners who have set a budget for renovation projects stated that tax reform has had an impact, with 18% increasing their budget and 7% decreasing it.
• Paying for Projects: The majority of homeowners (62%) plan to pay for projects, at least in part, by using savings. Additional payment strategies were further revealed. Intent to fund through home equity lines of credit (HELOC) jumped from 10 to 13%. "U.S. economic growth and limited housing inventory have contributed to healthy home equity gains," said Ellen Koebler, SunTrust head of consumer solutions. "HELOCs can offer a financial solution for many homeowners, as accrued value may be available to tap for renovations."
At the same time, the percentage of people intending to use a home improvement loan has grown 29% from 2017 with 54% more 18- to 34-year-olds planning to fund projects through home improvement financing.
"Consumers are becoming more comfortable with home improvement loans because of the availability of higher loan amounts, speed of delivery and the overall flexibility they provide," said Todd Nelson, LightStream senior vice president. "That's one reason LightStream recently extended its financing terms to 144 months. It gives homeowners with excellent credit the option of paying loans back over a longer period of time while still enjoying competitive fixed rates and the ability to fund on the same day. And, like all LightStream loans, there are no pre-payment penalties should they decide to pay their loan off early."
Other financing options are being considered, as well. While overall, 30% of homeowners say they'll pay for some portion of their 2018 project with a credit card, 16% fewer homeowners aged 18 to 34 plan to use them compared to last year.
