A surprising trend in real estate investing is occurring right now: majority of Americans would rather renovate their houses than purchase a new home.
According to the latest Housing Aspirations Report of Real Estate Marketplace by Zillow Research, 77 percent of Americans prefer renovating their home instead of buying a new one. The data was based on its annual report on consumer housing trends.
Why Americans Would Rather Remodel
The decision of these people to do home renovations is brought about by some important factors:
- Attachment to Home
Many Americans have grown so fond of their homes that they see no other place to live in. Apart from shelling out cash, having to buy a new home would mean a drastic change. They see renovating as equal to “building a new home from the one they already have.”
- Generational phenomenon
87 percent of those 55 years and above prefer to renovate. For retirees, 91 percent said that they would also remodel their home. Only 34 percent of those aged 18-34 are willing to shell out down payment for their first home.
- Rising interest and mortgage rates
Last year, mortgage rates had gone up to 90 basis points. Homeowners who currently have low rates may not want a new mortgage at a higher rate. In addition, buyers have less purchasing power.
- Lower inventory storage
Another contributing factor is the lower inventory of houses. The number of homes on sales has gone down for some time now. If homeowners refuse to sell because of less options on the market, they stay in their homes and the inventory becomes low.
In the 20 metro areas that were surveyed for the report, Boston and Detroit, at 80 percent each, prefer to renovate than buy. Los Angeles was the area less likely to do renovations, with only over two thirds preferring that method.
Sell Fixer Uppers
The prospect of new homes is alarming for real estate investors. If you yourself have bought a home and did the renovation to sell the house on the market, finding a buyer will be harder than before.
Fortunately, there is a workaround to this situation. First, try to invest in lower priced homes. That way, if there are renovations to be done, your total output will be lower than usual. You can then sell the house at an affordable rate and still make a profit.
Next, join real estate associations. In a real estate membership, you will be able to network with renovators on possible home selling ideas. You can get ideas on marketing to people who have second thoughts of purchasing a home. Through seminars, you will also get the chance to interact with fellow investors and know their techniques for selling. Do your research on these real estate member organizations, and find the one that will help you in your goal to success!