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Why 2020 Saw an Increase in Remodeling Projects

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There’s nothing like being stuck at home for months to realize that your place could use some sprucing up. 

Thanks to stay-at-home measures, the kitchen table is now the office for many American adults who are working from home or the classroom for kids who are distance learning. With all the time spent looking at the same four walls, at some point homeowners may have muttered (or more likely, shouted) something like: “We need to remodel this place!”

A pandemic surge. Whether motivated by frustration or necessity, the New York Times reports that Americans are making “extensive home improvements” this year amid the pandemic. In fact, 36% of homeowners were actively fixing up kitchens and baths in the second quarter, up from 19% in the first quarter, according to the National Kitchen and Bath Association.  

The current housing market may also explain the uptick in renovations. These days, there’s limited new housing inventory which means that when people move, they’re often moving into existing home (rather than new construction). That stands to encourage home improvement projects, according to one of the retailers who presented at this year’s Goldman Sachs Global Retailing Conference in September 2020.

Many homeowners may be opting for DIY renovations to potentially save money and avoid having workers come into their homes.

That retailer also noted that this market aspect could encourage home improvement projects—whether it’s owners sprucing up their homes to get them ready to sell or buyers springing for makeovers to personalize their new space. 

Grab a hammer and get to work. When it comes to revamping their homes, many Americans have opted for a do-it-yourself approach. At the September GS conference, one retailer noted that DIY-ers are taking on more projects, repurposing spaces and shifting discretionary spending to invest more in their homes.

But Americans aren’t exactly re-creating the Taj Mahal. The DIY approach is popular because some people don’t want workers in their homes lately and there’s been a shortage of pros available, the National Kitchen and Bath Association found. As a result, homeowners are typically spending less money on projects: just $6,000 in the second quarter, down from $12,500 in the prior quarter, the trade association says.

Home improvement activity is projected to cool off in 2021. Two different indexes of remodeling activity forecast a slowdown next year – both in the number of big-ticket projects (worth $1,000 or more and typically requiring a professional) and spending on renovation and repairs. 

This article is for informational purposes only and is not a substitute for individualized professional advice. Articles on this site were commissioned and approved by Marcus by Goldman Sachs®, but may not reflect the institutional opinions of The Goldman Sachs Group, Inc., Goldman Sachs Bank USA or any of their affiliates, subsidiaries or divisions.