In the last decade, the remodeling market has surged globally. Growth does not seem to be limited to a single country. The US, European, and Australian renovation markets are all booming. In fact, the Global Market Insights (GMI) estimates that the global renovation market will surpass $1,120 billion USD per year.
There are many factors that have led to this uptick in the market, which will discuss later on. A Joint Center for Housing Studies of Harvard University report found that in the US alone, the remodeling industry in the years after the recession has grown fifty percent.
Whether you are looking to remodel your existing home or purchase a distressed property to flip, you need to have knowledge about the global home remodeling industry. Understanding where the market is and where it is going will help ensure the right financial decisions.
Here’s an in-depth look at the global home remodeling market.
Factors driving the market
There are a number of factors behind the rise of the remodeling market:
- Home values
A big reason for the rise in the home remodeling market in the U.S. is that home values are rising. In fact, by 2018 homeowner equity had seen an increase of over $1 trillion per year. That has only continued to grow. Even in the UK, despite recent economic uncertainty, the property market after Brexit is recovering well, with house prices in London forecast to rise by one percent this year and 2.5 percent next year.
When home equity is high, homeowners feel more secure in investing in home improvements. They are more likely to borrow again their home equity to make big changes. Or, at least, homeowners may feel rich enough to use the money they have in the bank to remodel their homes.
- Smart tech in the kitchen and bathrooms is growing
One of the most popular renovations homeowners undertake is the updating of their kitchen and bathrooms. The introduction of green and smart technology accounts for a large portion of renovations. That same Harvard report that showed growth by fifty percent in the U.S. remodeling industry also found that about half of those remodeling projects are actually to replace existing technology.
Experts do not see this trend slowing down any time soon. In fact, as smart technology continues to advance, it is likely that replacement projects in the kitchen and bathroom will only increase. So, what are the smart technologies homeowners now opt to install in their homes? They include
- Kitchen faucets that are compatible with Alexa.
- Smart leak detectors for bathtubs.
- Smart toilets
- Soaking tubs.
- Refrigerated bathroom cabinets.
- Waterproof TVs for the bathroom.
- Smart showers.
The list goes on, and it is only growing. Expect to see the rash of smart technology for the kitchen and bathroom continuing for the foreseeable future.
- Home offices are making a come back
As the job market turns towards freelance and portable careers, the home office is seeing a rise in popularity. In the last decade, the call for a better work-life balance has been growing. In response, many companies now offer work-from-home opportunities to their employees.
As more people begin to work from home, the call for a dedicated workspace has only grown.
- Millennial home buying
A final major for the boom in the home remodeling market is Millennials. Although the Millennial generation has been blamed for causing everything from the death of the mall to killing the fast food industry, they also account for the rise in other markets. The home remodeling boom proves this.
Millennials, especially the older members, are less wealthy on average than earlier generations. This means that when Millennials purchase homes, they have to buy older homes that need repair. The housing market is aging as well, especially in the United States. New construction is declining. Therefore, home renovations have become almost a requirement for first-time homeowners.
The Global remodel market
The countries experiencing the largest boom in the home remodeling industry have also worked to create their current situation. Examining the European, American, and Australian home remodeling markets helps us prove this point.
Take, for example, Australia. The Reserve Bank of Australia cut interest rates in 2019 and is expected to make further cuts in 2020. The renovation experts, Houseace, state that the reduction of interest rates coupled with the continued growth of the housing market and a slight rise in Australian wages has meant homeowners have more money to spend on home renovations. Although this growth is not expected to continue much past 2021, it has fueled a boom in the Australian home remodeling industry.
Europe, too, has experienced a huge rise in their home improvement market. In fact, the market is expected to grow 2-3% per year through 2020. Like Australia, Europeans generally have a lot of disposable income, which has fueled the home improvement boom. Most Europeans prefer to perform the renovations DIY, which has caused their construction industry to lag behind the home improvement market.
We would be amiss in this article if we didn’t end with a quick discussion of the U.S. remodeling industry. Like its Australian and European counterparts, the U.S. market is predicted to continue growing for the foreseeable future. Allstate service groups a remodeling contractor tells us that an aging housing supply, more disposable income in some segments of the population, and the rise of DIY home improvement shows have all contributed to the remodel industry boom in the U.S.
So, what’s next? Well, as we’ve mentioned, most experts predict that the global renovation market will continue to expand. As long as homeowners have disposable income and feel secure, all signs indicate that they will continue to invest in remodels. Rapidly changing technology and career opportunities will also help the global renovation market to continue growing.
Your takeaway should be that now is a good time to renovate your home. The products and expertise are easily available. Your aim doesn’t have to be to overturn the real estate industry. However, by updating your home now, you are increasing its real estate value, and providing yourself a much more comfortable living situation in the meantime.