Americans are spending, and they’re spending wisely. According to a new poll by the U.S. Commerce Department, Americans are forgoing designer clothes and accessories and are instead choosing to spend their hard earned dollars on long-delayed home improvement projects.
On average, a homeowner can expect to spend between 1% to 4% of a home’s value on maintenance and repairs every single year. However, these new financial trends show that homeowners aren’t just investing in the usual home repairs, but rather investing in remodeling projects that reap the best return on their home improvement investments. The idea behind this is simple: repairs and remodels done on a home will almost always have a better ROI than springing for that new summer wardrobe.
That’s true whether you own a single-family home or an investment property with multiple tenants.
For homeowners and landlords looking to improve their properties, there are a number of options to choose from. For eco-conscious homeowners looking into green remodeling, something as simple as planting shrubs and trees around a property can increase curb appeal and save up to 25% in energy bills. Meanwhile, many tech-savvy homeowners are investing in smart home upgrades.
And the poll from the Commerce Department isn’t the only indication that home improvement budgets are increasing at the expense of other types of consumer spending.
Losses at J.C. Penny doubled within the first quarter of the year, while sales at other major department stores like Macy’s and Nordstrom also dropped dramatically. Overall, the sales at these stores have dropped 3.5% nationwide.
But this doesn’t mean there is a lack of consumer spending, as Americans are patronizing home improvement stores like Home Depot in much greater numbers. Even as department stores struggle, The New York Post reports that Home Depot has experienced a 5% overall growth within the past three years.
What’s driving this new trend?
According to Construction Dive, increased consumer confidence has many Millennials and Baby Boomers upgrading their properties. Not only did homeowners complete more home improvement and remodeling projects between February 2016 and February 2017 than in the year prior, but they also spent $1,850 more per project. In addition, eight in 10 homeowners polled by HomeAdvisor said they had plans to complete home improvement projects in the coming year.
These trends suggest that the nation’s clothing retailers don’t necessarily compete with other clothing retailers. Rather, these stores are competing against quartz countertops and chandeliers.
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