How Much People Spent on Home Renovations in 2017

A renovation project is clearly an undertaking that costs money — but how much? The answer, of course, depends on the work that is done and the cost of labor locally. But a new study out from Houzz reveals the midrange annual costs for renovations across the U.S., data that could serve as a good starting point as you plan. The survey also asked renovating homeowners what caused their projects to go over budget.

The 2018 Houzz & Home survey collected information from nearly 150,000 registered users of Houzz, including more than 72,000 homeowners who renovated their primary home in 2017. Read on for insights from this sizable group.

What people are spending on home renovations. A typical renovating homeowner on Houzz spent $15,000 on home renovations in 2017, in line with spending levels in 2016 and 2015. “Typical” here refers to the “median,” meaning the midpoint spending level for all renovating homeowners on all home renovation projects (from kitchens to closets) in 2017, with half spending more than $15,000 and half spending less. Economists consider the median a more useful measure than a plain “average” or “mean,” which get skewed upward by outlier pricey projects.

The chart also shows the top 10 percent of spenders paid far more than $15,000. Project spends for this group started at $85,000 per household in 2017 and went up from there.

Repeat homebuyers spend the most. While long-term homeowners made up the majority of renovating homeowners (57 percent) last year, repeat buyers who had recently purchased homes spent the most: $25,000 per household. Recent first-time buyers and long-term owners both had a median spend of $15,000.

“Repeat homebuyers tend to be older and to move into larger homes than first-time buyers,” says Nino Sitchinava, principal economist at Houzz. “These seasoned homebuyers opt for renovations of greater scope — many more rooms, systems, exterior features upgraded at a time,” which results in higher spending, Sitchinava says. This trend has held for the past three years.

Top 10 percent of repeat buyers spent $120,000 and up. The top 10 percent of repeat homebuyers (in terms of their spending) paid $120,000 or more for home renovations in 2017. The top 10 percent of recent first-time homebuyers spent $60,000 or more. Long-term owners fell between these two groups, with the top 10 percent of spenders paying $80,000 or more last year.

More people are setting renovation budgets. A larger share of renovating households (77 percent) created budgets for their renovations in 2017 compared with those who did so in 2015 (69 percent). Sitchinava sees this shift as a reflection of several factors that make people more likely to plan, such as general economic stability and a positive near-term economic outlook, as well as baby boomers making preparations for retirement.

But a budget set does not mean a budget kept. Nearly half (46 percent) of those who set a budget went over it in 2017. Still, 49 percent of renovating households managed to stay right on budget, while 6 percent came in under budget.

Products and materials push projects over budget. The No. 1 reason renovators cited for their budget overruns in 2017 was deciding to buy more expensive products or materials (42 percent). Almost as many renovating homeowners (41 percent) said products or services were more costly than expected. Notably, this second reason implies a lack of choice in the matter, whereas the first reason implies that homeowners made an active choice to spend more.

Tied as the third reason renovating homeowners cited for their budget busting was that the project was more complex than expected, or that they decided to change the project scope or design. The former, unexpected result affected more first-time buyers (39 percent) than long-term owners (28 percent) among those who went over budget.

Most renovating homeowners pay with cash. When it comes to paying for home renovations, cash continues to reign. The majority of renovating homeowners (85 percent) in 2017 paid for their renovations using cash or savings. Thirty-three percent used a credit card and 11 percent used a loan based on their home value, such as a home equity line of credit. (The total does not add up to 100 percent because homeowners were able to choose more than one option.)

Homeowners plan to keep improving their homes in 2018. Half of homeowners planned to continue or start renovations in 2018, while 48 percent planned on decorating, 34 percent planned home repairs and 3 percent planned home building. Of those who planned to start or continue renovations in 2018, the median planned renovation spend was $10,000 per household. The top 10 percent of spenders planned to spend $50,000 per household and up.

Note that while this level is lower than the actual median and top-tier spending levels for the past three years, it is in line with what homeowners predicted their spending levels would be over the last three years.