Will home remodeling boom set to peak in 2023?
During the first few months of 2022, the US real estate industry had to deal with an unstoppable rise in home prices.
While this time became a good time for real estate sales, given the appreciation of real estate, many Americans were not feeling that this was the right time to make such an investment. According to Fannie Mae, in a survey of buyer sentiment, 79% of respondents said it is not a good time to buy a home.
Several cities such as Miami, Phoenix, Los Angeles, and San Francisco are clear examples of places considered “hot” in the real estate areas, but which have become saturated with the number of homes available on the market.
Due to the high costs of buying a new home and the high rents, investing in construction and renovation has become a good business. Because of this, we can see other areas of the market growth, such as home construction and remodeling. Residential construction, for example, increased above the expected estimate in July and August 2022.
About 12.2% more than in previous months, according to The Wall Street Journal, the biggest increase in 36 years.
The home remodeling market in the United States
With the US real estate market sluggish in recent months, expectations for new home purchases are not so good, at least not in the first few months of 2023. The forecast is that home prices by the end of the year will end up at a high of 10%, according to Bank of America.
While rising mortgage rates can lead to this drop in sales, there are other ways to get your home renovated.
So, the new opportunities for remote work and the need to adapt homes to create work environments open up new opportunities for remodeling. Since it is more affordable to renovate a room or add a module to the house than to buy a completely new house.
Another good opportunity for those who work in the real estate industry is the possibility of investing in furniture that needs renovation, with the intention of resale or rent. This method, known as home flipping, is a great strategy for those who want to invest in the sector.
Also to be complete, as the market will not suffer large increases next year (the expectation is that the increase will not exceed 5%), it is possible to predict a reheating in sales of new furniture. So now is the time to start renovating, and then put the house back on the market next year.
However, we must point out that the market is uncertain, and many things are yet to come. Therefore, both investors and buyers need to keep an eye on market movements to avoid any big surprises.
For example, in recent years, several real estate companies have bet on some market trends. However, with the pandemic and other world problems, material prices have risen, and inflation has changed Americans’ plans.
So, keep your eyes open: caution and information are never too much when there is a lot of money involved in negotiations.
Read also: How to build a house considering rental maximization
