Study Finds U.S Homeowners Choose Secured Financing Options for Large-Scale Home Renovations

Window & Door
December 10, 2018
Markets

U.S. homeowners who leveraged secured financing to pay for renovations in 2017 were able to take on larger home improvement projects, with nearly three times the median spend of those who paid for renovations with cash-only ($32,000 versus $13,000), according to a study released today by Houzz Inc., in collaboration with Bank of America.

The study explored the role of secured financing in U.S. home improvement and found that one in seven homeowners who used secured financing—such as a home equity line of credit, home equity loan or cash-out refinancing—took on major remodeling projects. In fact, homeowners who spent $50,000 or more on renovations were three times more likely to pay with secured financing than those spending between $5,000 and $14,999, according to the study.

Of the available secured financing options, the study found that HELOCs are the most commonly used (47 percent). HELOC originations totaled $157 billion in 2017, accounting for more than 60 percent of consumer real estate-secured financing.

“Recent record gains in home equity give homeowners greater confidence to invest in their home, spurring growth in the more than $300 billion home improvement market,” says Nino Sitchinava, Houzz principal economist. “Secured loan originations will likely continue to grow in the near term as homeowners increasingly find it advantageous to stay put and renovate rather than trade up to a nicer home in an environment of tight housing inventories and higher interest rates, among other factors.”

The full study is available here.