Home renovations continue to boom & unlike a decade ago the most common way we finance them is cash:
Bottom Line: Home renovations have been even hotter than the housing market in the first half of 2017. According to Harris Interactive a staggering 59% of home owners planned home renovation projects this year. 42% are spending $5,000 or more on those projects. So how are we paying for those projects?
Unlike a decade plus ago when often debt led the way, our record home renovation projects are mostly being paid for with money we have on hand. According to GetHearth.com's Home Renovation Survey - here's how we're paying for them:
- 62% cash
- 26% loan
- 12% credit cards
So with only 38% of home improvements being financed, we're seeing much more responsible behavior than we used to and only 12% that are potentially making a significant financial mistake. If you use credit cards to pay for home renovations, that's great provided that you pay it off at the end of the month. If you do so and can't pay it off - that's about the worst thing you can do. The most common way to finance home renovations is a cash out refi or home equity line of credit.
One of the most interesting nuggets of info within the survey wasn't about home renovations...
- 15% of Americans never take on debt
Coming out of the Great Recession I mentioned that the change in consumer behavior might be the silver lining coming out of the crisis. The information in this survey seems to generally suggest that's the case.