Inflation Is Making Home Improvement Projects Less Attainable for American Homeowners
17 April 2023 - 11:00PM
Business Wire
Nearly three-quarters of homeowners are finding
projects to be more expensive than originally budgeted, causing
some to reconsider their renovation plans
Discover Home Loans issued a survey to understand how inflation
and higher interest rates have impacted American homeowners’
sentiment around investing in their homes versus moving to new
homes.
Inflation is significantly impacting homeowners’ desire to
undertake home improvement projects, with 59% of survey respondents
choosing to postpone their projects and 26% saying they will reduce
the scope of their projects in the face of increased costs. That
said, there remains strong demand for home renovation as 79% of
homeowners surveyed still prefer to renovate their current house
rather than move to a new home.
Rising interest rates are also having an impact on consumers'
desire to move and purchase a new home. When asked how rising
interest rates have specifically impacted their intention to
purchase a new house, 42% of survey respondents said they are no
longer looking to do so and an additional 21% are still looking but
are less set on buying a new home.
“Our survey results show that homeowners are still looking to
invest in their homes, despite higher home improvement costs. With
large amounts of existing home equity untapped, a home equity loan
is an attractive option for many homeowners looking to finance
large-scale home improvements or consolidate their debts,” said Rob
Cook, vice president of marketing, digital & analytics of
Discover Home Loans. “Since home equity loans are second mortgages,
they allow homeowners to keep their existing primary mortgage,
which can be beneficial if they have a low rate on that mortgage.
Another benefit is that home equity loans typically offer lower
rates than credit cards and personal loans, and unlike HELOCs,
provide the certainty of a fixed interest rate.”
How Inflation is Affecting American
Homeowners’ Home Improvement Projects
Their project is costing more than
expected/budgeted
44%
They had to cut part of their project
26%
They are looking into a new or additional
loan to cover their project
14%
They took out a higher loan than initially
planned to cover their home improvement project
11%
Inflation has not affected their home
improvement plans
26%
When asked what home improvements to undertake, homeowners are
most interested in conducting routine maintenance, though the
number of people wanting to do it decreased by 4 percentage points
compared to last year’s survey. The number of Americans planning to
remodel their existing bathroom jumped 5 percentage points while
those wanting to update their appliances increased by 3 percentage
points.
Top 5 Improvements Americans are
Wanting to Undertake:
Routine maintenance
38% (4% decrease from last year’s
survey)
Updating appliances
34% (3% increase)
Remodeling an existing bathroom
34% (5% increase)
Refinishing or replacing flooring
31% (0% increase)
Remodeling an existing kitchen
30% (2% increase)
Cosmetic changes and eco-friendly home improvements are
top-of-mind
Similar to last year’s findings, 80% of homeowners surveyed
agree they are making improvements as a way to invest in their
home, and 82% agree they plan to make cosmetic changes to their
home to better fit their style and needs.
An interest in making “green” or eco-friendly renovations to
homes was emphasized in these results, with 59% of homeowners
fitting them into their renovation plans. Nearly half of
respondents said they were doing so because they are
environmentally conscious, while 68% aim to save money on their
energy or water bill. Interestingly, Gen Z and Millennials were
found to be most likely to make green updates to their homes at
67%, versus 56% of Gen Xers and 47% of Baby Boomers.
“As U.S. homeowners continue to deal with inflation and interest
rate hikes, it’s important for homeowners to plan ahead and
understand their budget before starting their renovation projects,”
said Cook. “Homeowners should research current home loan options to
get the best deal possible. Online tools, like Discover’s Loan
Calculator can help homeowners determine how much they can borrow
and what monthly payments could look like.”
About the Survey
The national survey of 1,500 homeowners was commissioned by
Discover and conducted by Dynata (formerly Research Now/SSI), an
independent survey research firm. The surveys were conducted
online; the first was fielded from January 19th through January
29th, 2023. The maximum margin of sampling error was +/- 2% with a
95% level of confidence.
About Discover
Discover Financial Services (NYSE: DFS) is a digital banking and
payment services company with one of the most recognized brands in
U.S. financial services. Since its inception in 1986, the company
has become one of the largest card issuers in the United States.
The company issues the Discover® card, America's cash rewards
pioneer, and offers private student loans, personal loans, home
loans, checking and savings accounts and certificates of deposit
through its banking business. It operates the Discover Global
Network® comprised of Discover Network, with millions of merchants
and cash access locations; PULSE®, one of the nation's leading
ATM/debit networks; and Diners Club International®, a global
payments network with acceptance around the world. For more
information, visit www.discover.com/company.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230417005162/en/
Media Contact: Sheetal Shah Discover
sheetalshah@discover.com 224-405-0297 @Discover_News
Discover Financial Servi... (NYSE:DFS)
Historical Stock Chart
From Jun 2024 to Jul 2024
Discover Financial Servi... (NYSE:DFS)
Historical Stock Chart
From Jul 2023 to Jul 2024