Home improvement is the process of renovating or making additions to one’s home. It can include projects that improve the interior (such as kitchens and bathrooms) or exterior of the house, and may also include landscaping work and constructing fences or decks. Home improvements can be made for a variety of reasons; increasing comfort and convenience, fixing problems, adding safety features, or simply updating the look of the property.
The home improvement industry encompasses the sale of building materials, appliances, decor, and other products for renovations and upgrades, as well as the services provided by contractors and tradespeople to carry out these projects. The size of this market is determined by the number of households undertaking such projects, as well as their average expenditures. The most common project undertaken by homeowners is replacing or repairing roofs, followed by upgrading or installing central air conditioning and heating systems.
In recent years, the home improvement industry has enjoyed robust growth. This reflects the increase in homeowner confidence and the relatively low interest rates, which encourage homeowners to borrow funds for remodeling work. Also contributing to the industry’s success are growing population of older homeowners, who typically have a high disposable income and substantial equity in their homes that can be used as security for loans.
According to NerdWallet’s September survey, three-fourths of respondents report that they have money set aside specifically for home repairs/improvements and that they are able to easily cover the cost of these projects without having to tap into savings or go into debt. For the rest, funding for high-dollar projects typically comes from sources like cash out refinancing, home equity loans, credit cards, and contractor arranged financing.
It is recommended to use caution when hiring a contractor for any home improvement work. Obtaining references from previous customers, checking the contractor’s license and insurance coverage, and performing background checks on the contractor can help homeowners choose the best service provider for their home. Those who hire contractors to perform home improvement work should also draft a contract that includes a detailed schedule of the work to be performed, a payment schedule with milestones and a timeline for completion, as well as specifics of the materials and brands to be used in the project.
Many homeowners make changes to their homes in the hope that these improvements will add resale value when they eventually sell. But not all renovations will pay off, and some may even end up costing owners more than they initially invested. To avoid costly mistakes, homeowners should consider talking to a real estate agent before starting any major projects. A real estate professional can help them determine which improvements will be worth the cost and which ones might not. They can also provide advice on how to best work with contractors.