Home renovation: Lifestyle changes, aging homes, rising prices spur record spending | State & Regional

About a year after the onset of the pandemic, Kathy Lange-Novak and her husband, Frank Novak, decided it was time to update their Fitchburg home.

After 26 years, the floors, countertops and appliances were showing their age, and the couple thought they needed to upgrade before putting the house on the market.

“This is the first time we’ve remodeled anything,” Kathy said. “It needed an overhaul.”

Like so many Americans, the recently retired couple had spent most of the past year at home as COVID-19 health restrictions limited their social activities.

“It’s one thing when you go, ‘We could really use new carpeting, but we can go to the movies,’” and forget about it, Lange-Novak said. “When you have to look at it — that’s when you think, ‘I really need to do something about it.’”

Spurred by a housing shortage, aging structures and occupants, and months spent cooped up indoors, U.S. homeowners spent nearly $370 billion last year updating and renovating their homes, according to Harvard University’s Joint Center for Housing Studies. That record number is expected to top $430 billion this year, a whopping 28% increase from 2020 spending levels.

“It’s a big market,” said Abbe Will, a senior researcher at the center, which has been tracking residential remodeling for nearly three decades.

While there are multiple factors, Will said lifestyle changes brought about by the pandemic have only encouraged more home improvement spending, as people seek to make homes fit their changing needs — whether that’s working from home or just spending more time there.

“Homeowners (want) to maximize every inch of space they have when they’re spending so much more time at home,” Will said.

Initially, 2020 looked to be another year of modest growth for the home remodeling industry, until the shutdown of most nonessential services in March brought projects to a halt. But builders say their phones started ringing again that summer as people realized the pandemic wasn’t going away.

“It’s just been a building crescendo of work,” said Chad Speight, owner and president of Chad’s Design-Build in Madison. “We started to see an uptick in demand as people were stuck at home staring at whatever needed to be improved or replaced.”

Abe Degnan, owner of Degnan Design-Build-Remodel in DeForest, said people are looking to make their homes bigger, create spaces for work or recreation, redo bathrooms and kitchens and generally make their homes more comfortable.

“People are eating out less and cooking more,” Degnan said. “Things they used to ignore … are driving them crazy.”

The unprecedented demand, combined with labor shortages and supply chain issues, has resulted in lead times of one or even two years and project delays.

Speight said he’s basically booked through next year, even with a couple of new employees. “We would hire more carpenters right now if we could,” he said.

Jonathan Graves, co-owner of Ironwood Construction in Madison, said he’s been so busy the past two years that he’s had to turn away new clients.

“We could not keep up,” he said. “We had to pick and choose our jobs.”

Material shortages and volatile pricing have also created logistical challenges.

Lumber prices quadrupled in the spring of 2021 amid surging demand and supply chain constraints and are still more than double pre-pandemic levels. That had ripple effects on manufactured materials like windows and cabinets.

Speight said suppliers used to give contractors a month or two notice of annual price increases.

“Now we get notification on Thursday that prices are going up tomorrow,” he said. “Take it or leave it.”

Joanna Ivey and Jack Gordon got a lesson in supply-chain management this spring, midway through a major home renovation.

After nearly a decade, Ivey said 2020 was the year she finally decided to remodel her 64-year-old West Side ranch.

“We kind of had this vision since we moved in. We just didn’t have the money to do it when the kids were little,” she said. “The kitchen was literally falling apart.”

Ivey ran her graphic design firm from home even before the pandemic, but the lockdown provided some extra incentive to remodel the kitchen and living space.

“You just stare at it all the time,” she said. “We’re not having people over.”

Ivey started interviewing contractors in November 2020, and construction started in January, a full year after signing a contract. The work was supposed to be done by early April, but the cabinets didn’t arrive on time.

“They didn’t have the wood, which is nuts to me,” she said.

Ivey said the project should be done in time for her son’s graduation party in June, and despite living without a kitchen for six months, “it will absolutely be worth it.”

“It’s a ranch, so it will be great for retirement and beyond,” she said. “It’s the perfect house and the perfect location.”

While the pandemic was a catalyst for many home renovation projects, it’s hardly the only factor.

Since the housing market crash that triggered the recession of 2008-2009, U.S. homebuilders simply haven’t kept pace with demand. In fact, spending on home repair and maintenance has outpaced new homebuilding.

“We’re not building enough to meet the demand, and that puts a lot of pressure on the existing housing stock,” Will said.

At the same time, Americans move about half as often as they did three decades ago, according to Census Bureau data. Homeowners are even less mobile, moving just once every 20 years on average.

And over the past couple of years most homeowners have refinanced at historically low interest rates, creating yet another incentive to stay put, said Mark Eppli, director of the James A. Graaskamp Center for Real Estate at the Wisconsin School of Business.

That means Baby Boomers are sticking around — or “aging in place” — at a time when millions of millennials each year are reaching the traditional home-buying age, contributing to additional pressure on housing prices.

And because of soaring prices, Will said the average homeowner has accumulated hundreds of thousands of dollars in equity that they can use to finance their improvements.

So long as the bottleneck persists, property values will continue to rise, which is good for homeowners but bad news for millennials and others who find themselves priced out of the market and unable to accumulate property wealth.

“It makes it more difficult for that first-time homebuyer to enter the market,” Eppli said. “There’s not much of a silver lining for that group.”

In ‘frenzy’ of housing market, buyers take risks or risk losing out

Just as more homeowners are aging in place, their homes are also aging.

Most Wisconsin homes are more than 40 years old, according to Census Bureau data, and more than a third were built before 1960. That’s a lot of roofs, siding and carpeting that needs to be replaced. And a lot of homes built for a different lifestyle.

Consider Mark McFadden and Heidi Kent’s Near East Side bungalow. The only bathroom is on the second floor, and the kitchen can comfortably accommodate one, which may have been fine when the home was built in 1919.

“The kitchen was treated as this very utilitarian environment,” McFadden said. “When I go over to friends’ houses … I expect to spend time in the kitchen.”

Assuming the materials are available, McFadden and Kent hope to start work this summer on a long-planned renovation to enlarge the kitchen, add a main floor bath and make the home more accessible.

An internet security consultant, McFadden has worked from home for decades and said the pandemic wasn’t really a factor in their decision, though it has affected the timing of the job.

“The planning is done. Everything is ordered,” he said. “Now it’s mostly a waiting game.”

McFadden, 66, said he and Kent love the neighborhood and want to make their home “a more wonderful place for us to spend the rest of our lives.”

“We’re not interested in accumulating property wealth,” McFadden said. “We’re interested in having a house that’s more comfortable … easier for older people to get around.”

Kathy Lange-Novak had different ideas when she embarked on her home renovations last year. She figured fixing up the home was a prerequisite for selling it a few years from now.

But now that the work is done, Lange-Novak said she doesn’t want to leave.

“Being home a lot made us say, ‘Let’s fix it up,’” she said. “Fixing it up has made us want to stay home more.”