INTERACTIVE: How Do Homeowners Spend Their Remodeling Dollars?
With the aging of the housing stock and declining household mobility, homeowners now spend nearly half of their improvement dollars on replacements of worn home components and systems. In the decade before the housing crash, replacement projects accounted for 40 percent of total improvement expenditures according to analysis of American Housing Survey data included in a new report from our Remodeling Futures Program, Improving America’s Housing 2019.
Our interactive chart on homeowner improvement expenditures by project type shows that spending for exterior replacements (including roofing, siding, windows, and doors), interior replacements (including flooring, paneling, ceiling, and insulation), and replacements of systems and equipment (including plumbing, electrical, HVAC, and appliances) more than doubled in real terms from $55 billion in 1995 to $111 billion in 2017. Especially strong growth in interior replacements and systems and equipment upgrades—with each segment growing about 140 percent over this time period—drove the expansion of the overall replacements share from less than 40 percent in 1995 to 48 percent by 2017. While real spending on exterior replacements also grew more than 60 percent from 1995–2017, its share of aggregate homeowner improvement expenditures held steady at about 20 percent.
As the share of spending for replacement projects has expanded, the share of spending for discretionary projects (including kitchen and bath remodels, room additions, and outside attachments of porches, decks, garages, and carports) shrank from 37 percent in 1995 to 32 percent in 2017, as did the share of spending for all other projects (including disaster repairs and lot or yard improvements) from 23 to 20 percent.
Some of the growing focus on replacement projects likely reflects necessary investments that were deferred by homeowners during the last recession. The aging of the housing stock is another factor; the median age of owner-occupied homes nationally rose to 39 years in 2017, up from 32 years in 2007 and 29 years in 1997. Average annual improvement spending for replacement projects increases with the age of the home from $600 on homes that are less than 10 years old to $1,200 for homes aged 10–19 years to about $1,500 for homes that are 20 years or older.
The aging of the population and decline in household mobility rates have also played a role in the growing emphasis on replacement projects, given that older and longer-term homeowners typically spend more of their improvement budgets on replacements. In 2017, owners age 55 and over devoted 51 percent of their home improvement budgets to replacement projects compared to 43 percent of owners under age 35. Likewise, older homeowners who have lived in their current home for 20 years or more spent 55 percent of their improvement budgets on replacement projects compared to 40 percent for same-aged owners who moved within the past three years.