Homeowners have been investing considerable amounts of money into their houses since the spring of 2020. The pandemic caused a reevaluation of how a house functions, and a combination of buying, selling, and refinancing helped drive upgrades. Will consumers continue this investment pattern, or will they look for other ways to spend their money as the economy opens?
The results of the latest survey from home improvement platform Modernize indicate the trend of spending on the home will continue at least through the rest of the year. The website surveyed 6,500 homeowners in September and October 2021. The survey asked about their plans for spending in addition to the project they came onto the site to research.
“We’re continuing to see homeowners seek projects,” said Cassie Morien, Modernize’s senior content strategist.
Thirty-nine percent of respondents said they will pursue additional home improvments. That’s down slightly from 41% of respondents in Modernize’s spring survey, but up from 38% at the start of the year. This means interest in performing even more upgrades to a home continues even as extra money from stimulus programs have ended and mortgage rates rise.
“It shows really steady interest from our homeowners,” Morien said.
Manager of Client Strategy and Development, Modernize
Reducing Utility Bills
Upgrades to outdoor areas and kitchen/bath remodeling made up 46% of the extra projects, with the category including HVAC making up 19% and another 8% for critical projects that include mechanical, plumbing, and electrical. Megan Wolfe, Modernize’s manager of client strategy and development, said contractors should remember that there is interest in spending more. Wolfe said they should market to customers beyond what they initially contacted them about. This includes complementary products such as IAQ solutions for HVAC contractors.
It’s especially important to offer consumers options that reduce their utility bills, Wolfe said. Nineteen percent of respondents looking at HVAC projects want to know more about energy savings. HVAC contractors need to guide consumers to equipment options that reduce energy costs and make them aware of incentives from local utilities.
“I see that as a huge opportunity,” Wolfe said. “The more you can lean into those energy saving aspects, the more you can move those sales conversations forward.”
Holding Homeowner's Hands
That’s especially important since consumers are concerned about how much they will spend on a project. HVAC customers are a little better than the rest of the respondents, with about two-thirds expecting to spend between $2,500 and $10,000. Still, 81% of respondents start looking at a home improvement project without any budget.
“A lot of folks don’t understand the scale and the cost of these kind of projects,” Wolfe said.
They need a contractor to walk them through the process. This is especially true of first-time homebuyers, who tend to be younger. Wolfe said the process with older homeowners is more transactional. A younger homeowner requires “a little more handholding.”
One of the best ways to answers concerns about cost is by offering financing. About two-thirds of respondents plan on financing some or all of their home improvement project. Since HVAC upgrades often result from an emergency, financing becomes even more important.
“We consistently see that offering different finance solutions is a key piece to winning as much business as possible,” Morien said.
The good news is homeowners should have more to spend because they plan on travelling less this holiday season. Another Modernize survey found that 77% of respondents will stay home again this year and more than half of those respondents are going to spend that money on home improvements.
These results surprised Morien — she said she had expected more people to resume travelling and visiting relatives now that vaccines are available. Homes remain the place where the spending is.