Home improvement is an ongoing process that involves repairs, maintenance and upgrades to a residential property. The value of a home is often increased by these improvements. This can increase a property’s saleability or allow the homeowner to claim tax deductions for the improvements. The type of home improvement that a property owner undertakes can vary considerably, from painting the kitchen to adding an entirely new living space. Some projects, such as installing a koi pond in the backyard, are more likely to be viewed as purely personal and will not add much value to the home.
The number of home improvement projects undertaken by homeowners has increased significantly during the past two years. This is largely due to the pandemic, with homeowners spending more time at home and having extra income to devote to fixing things around the house. However, there is a fine line between improving your home and over-improving it, with few renovations recouping their costs or even earning a good return on investment (ROI).
Many homeowners rely on credit cards, cash-out refinance loans, contractor arranged financing and home equity loans to finance home improvement projects. In the most expensive projects, these sources typically account for more than half of the funding. The remaining funds come from personal loans, borrowing from friends or family, and other unspecified sources.
In general, married couples and families are more likely to undertake home improvement projects than single people or couples without children. However, the youngest generation of homeowners — those born after 1984 — is also more active in this area, driving about 6 percent of all project spending, according to NerdWallet research.
A large and varying ‘grey market’ of unlicensed and unregistered firms is operating in the home improvement sector. Homeowners should always check for a license, insurance and business references before hiring anyone to work on their property. Homeowners should also consider using aggregators which bundle home improvement service offers and act as an intermediary agency between the service providers and customers.
There is a wide range of DIY home improvement projects that can be done by the average person, and which will add real value to a property when it’s sold. These include painting, re-grouting tile and power washing the exterior of the house. The best way to avoid losing money on a project is to make sure that the work is performed by a company with a registered licence and which is members of a trade association or is accredited by a professional organization. In addition, a homeowner should check that the contractor’s work is guaranteed by the firm. This will provide the homeowner with reassurance that the company will address any issues with the work. For example, a warranty should be in place for plumbing and electrical repairs. A warranty is not an assurance that the work will be completed, however, as there is no guarantee that the contractor will complete the work to a satisfactory standard.