Are home renovations on your list of New Year’s resolutions? Find out everything you need to know about home improvement costs and where the market is headed in 2024.

How Much Did Home Improvements Cost in 2023?

Remodeling is a great way to ensure your home meets your needs. It’s usually more cost-effective than purchasing a new one, plus you don’t have to worry about moving your family into a new location.

That said, renovations can be expensive. According to HomeAdvisor, remodeling costs average  $50,069 per project and typically range between $20,000 and $100,000. Of course, what you end up paying will ultimately depend on three factors:

House Size 

The size of your space will greatly affect the renovation’s price tag. Generally, costs range between $10 to $60 per square foot but can go higher if you opt for high-end materials and appliances.

Room Type 

There are two room types: wet and dry. A wet room, like a bathroom or kitchen, tends to cost more than a dry room because it requires plumbing. For example, living room renovations typically range between $5,000 and $10,000 whereas bathrooms can cost as much as $25,000. 

Scope

Lastly, consider the scope of your project. Remodels are broken into a few categories:

• Low-end projects include smaller cosmetic work like painting, landscaping and flooring
• Mid-range remodels include above-average appliances and materials, such as hardwood floors or decorative light fixtures
• High-end jobs feature the highest-quality materials, custom cabinetry, additions, roofing windows, siding and other major home improvements

What's In Store For 2024?

The home improvement market is in for an interesting year. According to Harvard University’s Joint Center for Housing Studies, experts predict a 7.7% decrease in home renovation spending in 2024. That’s a $37 billion drop compared to last year.

The report cites the main reasons for the decline are higher interest rates and softening house price appreciation. In other words, higher borrowing costs and economic uncertainty are impacting homeowners’ willingness to make home improvements.

Researchers also suggest reduced home sales are directly related to lower renovation spending, as repair and remodeling activities normally occur around the time homes turnover. Another factor to keep in mind is the price of building materials, the cost of which is expected to continue increasing well into 2025.

Ways to Save on Home Renovation 

Here are some of our favorite strategies to spend less and get more out of your next renovation:

1. Take a Phased Approach

Patience is a virtue when it comes to remodeling. As much as you’d like to see the finished product as soon as possible, completing the work in phases is much less overwhelming and expensive in the short term. Plus, renovating your home all at once may lead to costly mistakes and oversights.

Start with one or two rooms. Not only does this allow you to give them your full attention, it’s also smart from a budget standpoint. If you run into unexpected expenses, you’ll have more flexibility to deal with them without having to stop work, take out a loan or compromise on other projects.

2. Explore Your Financing Options 

Avoid debt if you can. But, if you can’t afford paying renovation costs out of pocket, consider the financing options at your disposal:

• Home equity loans allow you to borrow against the equity you have in the property 
• Home equity line of credit (HELOC) is a type of home equity loan that functions more like a credit card. You borrow up to a certain amount and pay interest only on the amount you use. This is a popular method for financing phased renovations 
• Personal loans is a type of home equity loan that functions more like a credit card. You borrow up to a certain amount and pay interest only on the amount you use. This is a popular method for financing phased renovations 

Of course, regardless of which option you choose, consider interest rates, repayment terms and associated fees. 

3. Consider DIY Solutions 

Why spend money on labor if you can do the work yourself? Certain projects, such as painting, don’t necessarily need to be done by an expert. Rather, consider Do-It-Yourself (DIY) solutions as long as they’re within your skill set.

4. Research Local Contractors 

Despite the last point, some jobs should be left to professionals. Major projects like plumbing and electrical work can be complicated and dangerous to perform. However, professional-grade work can be expensive, so do your due diligence. Get multiple estimates to compare prices. Contractors are busiest during the summer, so consider hiring one during slow periods to get a better deal. Above all, ensure your contractor is right for the job, and you’ll be sitting comfortably in your new home in no time. 

This content is for informational purposes only. It is not designed or intended to provide financial, tax, legal, investment, accounting, or other professional advice since such advice always requires consideration of individual circumstances. Please consult with the professionals of your choice to discuss your situation.