’Tis the gift-giving season, and the Houzz research team is offering you something you’ll truly use all year round: valuable business insights. We’ve reviewed our survey data from 2023 to give you the most useful highlights in a neat package right here. The responses from homeowners as well as building, remodeling and design pros reveal trends not just in the overall market but in what aspects of customer service businesses can improve. Use the highlights below to shape your plans for 2024 and make your business better than ever.
Mixed Renovation Outlook
The Houzz Renovation Barometer, updated quarterly, provides insights into the impact of recent economic volatility on the home improvement market.
It shows that since the sharp drop in business activity in the second half of 2022, construction businesses have been reporting continuous declines in their new inquiries coming in as well as in the number of projects they are able to secure. Both build-only and design-build firms have experienced this sharp decline simultaneously; however, the impact seems to be bigger for build-only remodelers. The overall sentiment that there are fewer project inquiries and committed projects is common among them. Indeed, for five consecutive quarters, more businesses in both of these professional categories have been reporting declines in business activity than those who have been reporting increases.
Businesses in the architectural and design services sector have been reporting quarter-over-quarter declines since Q1 2021. In Q3 2022, the Barometer score for this sector dropped below 50, meaning that more businesses reported slowdowns in their business than those that reported increases. However, the score did climb over 50 in Q3 2023, meaning that more businesses reported improvements in activity than those who reported a decline.
Despite the headwinds pros in the construction and design sectors are facing, three particular housing market conditions are looking to favor renovators going into 2024. First, the deficit of single- and multi- family homes nationwide has been continuing to grow. It now stands at about 2.3 million, according to CNN — and household formation is still outpacing the building of homes. Second, the existing housing stock is continuing to age; 42 is now the average age of homes across the United States. And third, interest rates have jumped in the past two years. The average mortgage interest rate was 7.8% in October 2023, up from 7.1% in 2022 and 3.1% in 2021, according to Freddie Mac.
On top of that, according to the 2023 U.S. Houzz & Home report, 61% of renovating homeowners plan to stay put for at least 11 years. And 42% plan to stay in their current homes permanently, versus only 36% in 2019.
Takeaways: While inquiries and secured projects have been mostly declining for all sectors, new homes are scarcer, mortgages are more expensive for most buyers, and existing homes are more in need of renovations. So renovation activity might pick up in 2024 and later.
Projects Proceeding Apace
Despite the uncertain economy, only 15% put their renovation projects on hold in 2023, according to Houzz research, and fewer than 1% of homeowners canceled planned projects. More than a quarter of respondents (27%) are planning to start projects in 2024 or sooner.
Moreover, homeowners are less likely to start projects to ready a house for sale. The share of homeowners undertaking renovations with a plan to sell their home soon has declined by half since 2018 (6% in 2023, compared with 12% in 2018), according to the 2023 U.S. Houzz & Home report.
Takeaways: Homeowners are still enthusiastic about renovating, and more of them are doing it to make their spaces work personally for them rather than for unknown future buyers.
Pros? Yes, Please
According to Houzz research, a whopping 91% of homeowners who completed renovation after August 2023 hired professional help, and 88% of homeowners with a project planned for 2024 or sooner are doing so as well. For the completed projects, general contractors (40%) and electricians (34%) are most in demand.
How are renovating homeowners finding these pros to hire? Per the 2023 Houzz & Home study, referrals from family and friends are the No. 1 source (59%), but websites and social media are popular too (38%). About a quarter of homeowners (30%) choose a pro they’ve worked with in the past.
And if you’re looking to boost customer service, it’s good to know that our survey respondents cited clear communication from the pro as the biggest factor that could have improved their experience. After that, in order of popularity, renovating homeowners cited schedule tracking, transparency into expense tracking, details on project outcome, and better guidance on product/material options as aspects that would have made their project experience better.
Tips: Make tracking schedules and communicating with clients easier by adopting an all-in-one software, such as Houzz Pro. It also lets you share budgets with clients, present 3D walk-throughs of designs and take payments online. And of course invest some time in getting new referrals and reviews!
Accessibility and Home Systems Take Precedence
Many people are focusing on creating accommodations for aging in place, as more than 2 in 5 of renovating homeowners plan to stay in their homes (42%). Bathrooms in particular are ripe for accessibility upgrades, with the percentage of renovating homeowners upgrading their bathrooms to include these accommodations rising by 12 points since 2021. In fact, according to the 2023 Houzz U.S. Bathroom Trends study, two-thirds of homeowners (66%) are currently addressing special needs during bathroom renovations, up from 54% in 2021.
The needs of aging household members remain the top priority, both currently (38%) and for the future (50%). And more than 2 in 5 (44%) of renovating homeowners are preparing for special needs to arise within the next five years.
Given the increasing average age of existing homes, upgrading home systems also is a priority. According to the 2023 U.S. Houzz & Home study, which covered projects completed in 2022, nearly 3 in 10 renovating homeowners (29%) upgraded plumbing in that year, closely followed by electrical and home automation (28% and 25%, respectively). Electrical upgrades gained 4 percentage points in 2022 after remaining stable at 24% for the previous two years.
Among typical home system upgrades, cooling and heating systems commanded the highest median spend in 2022: $5,500 and $5,000, respectively. More than 1 in 5 renovating homeowners undertook these projects in the survey year.
Sustainability Matters
The vast majority of renovating homeowners incorporate sustainable options in their renovated kitchens and baths (92% and 87%, respectively), according to our 2023 Kitchen Trends and Bathroom Trends studies. In both of those spaces, LED lightbulbs are the top choice (65% for kitchens and 62% for baths). After that, water-efficient fixtures and a timeless design are nearly tied (46% and 44%, respectively) for baths, and energy-efficient appliances are strongly in second place for kitchens (61%), followed by water-efficient fixtures (34%).
For both spaces, the majority of homeowners cite long-term cost effectiveness as their primary motivator for sustainable choices, followed by environmental friendliness.
Tip: Learn about the latest trends and products for sustainable spaces at industry events in 2024.
With all of this info at your fingertips, you can ring in the new year with a clearer idea of what to expect and plan accordingly. Here’s to a joyous and profitable 2024!
See the full studies:
2023 Houzz State of the Industry
2023Q4 Houzz Renovation Barometer - Construction Sector
2023Q4 Houzz Renovation Barometer - Architectural & Design Sector
Want advice delivered to your inbox?
Unlock industry insights and updates for contractors and design pros
By signing up, I agree to the Houzz Terms of Use and Privacy Policy and that Houzz may use my information to contact me about relevant content, products, and services.
Join the conversation by commenting or asking a question below. The Houzz team reads every single comment, and we’ll get back to you by email if you need us!