Yahoo Finance Home remodeling exploded as a result of pandemic: Housing expert
When the COVID-19 pandemic struck and lockdowns ensued, Americans found themselves with more time than ever to focus on their living environments.
As a result, home remodeling in the U.S spiked. Annual spending on improvements and repairs to owner-occupied and rental properties between 2019 and 2021 grew 23% to $495 billion, according to a new study from the Joint Center for Housing Studies of Harvard University. That’s compared to the market’s historical 4.4% average pace of growth.
Carlos Martín, who worked on the study, is project director of the remodeling futures program at Harvard. During a recent appearance on Yahoo Finance Live, he explained why U.S. homes are seeing such significant increases in remodeling.
“We saw drastic growth in rental improvement as much as homeowner improvements. Part of the reality is our homes are aging. And so ... there’s going to be a need to do replacements.” Martín told Yahoo Finance.
During the Great Recession, construction rates of new homes plummeted. In 2021, the median age of owner occupied homes hit 41 years, up from 35 years in 2011, and just 31 years in 2001, the report noted. Consequently, U.S. homes are older than ever reported and that means more need remodeling.
“So, because they're aging, there's going to be a need to do replacements, those things are going to cost money,” Martín said. “But in some of these cases, like doing an energy efficient improvement, you'll be saving money in the long term. So there are also additional benefits that would come from things like that.”
While a repair means simply restoring the function of an item, an improvement extend its life and increases its value. For instance, while fixing a water heater would be a repair, replacing one altogether would be an improvement.
Martín explained that improvements, rather than repairs or maintenance, constituted the bulk of the remodeling market in 2021. Roughly two thirds of remodeling market spending in 2021 was on improvements for both rental and homeowners.
According to the report, whole-house roof replacements constituted $38 billion or over a third of homeowner spending on energy-related projects in 2021. Meanwhile, Americans also spent 30 billion on revamping heating, ventilation and air conditioning systems and $18 billion on replacing doors and windows.
“So people invested when they were staying at home during the pandemic. They couldn't take trips, they decided anecdotally to invest that money in their own homes and so a lot of that money, a lot of that high headline, market growth was from those kinds of replacements,” Martín said.
Dylan Croll is a reporter and researcher at Yahoo Finance. Follow him on Twitter at @CrollonPatrol.
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