For the past two decades, baby boomers have been the leaders in renovation spending.
According to the Demographic Change and the Remodeling Outlook, it looks like they aren’t backing down any time soon. Renovations by homeowners 55 and older are expected to increase by nearly one-third in the next decade (by 2025), representing more than 75 percent of total gains.
In 2025, baby boomers are expected to represent 56 percent of all renovation spending, up from 31 percent in 2005. Generation X members are expected to finally do the remodeling they have put off, due to the economy, and millennials are also expected to pour some money into renovations in their newly-purchased homes. Remodeling is expected to grow about 2 percent each year until 2025, the report found. In 2015, homeowner remodeling hit $340 billion, a new high.
“With national house prices rising sufficiently to help owners rebuild home equity lost during the downturn, and with both household incomes and existing home sales on the rise, we expect to see continued growth in the home improvement market,” says Kermit Baker, director of the Remodeling Futures Program at the Joint Center for Housing Studies.
The study said that rising home prices are leading owners to update their homes, but this could be making these homes even pricier when they do hit the market. Baby boomers are most likely to update their homes to be more accessible, while millennials are updating for energy efficiency and automation.
“The remodeling industry should see numerous growth opportunities over the next decade,” says Chris Herbert, managing director of the Joint Center for Housing Studies. “Strong demand for rental housing has opened up that segment to a new wave of capital investment, and the shortage of affordable housing in much of the country makes the stock of older homes an attractive option for buyers willing to in invest in upgrades.”