CONTINUED FROM 1 RETURNS ON RENOVATIONS Home renovation is a $580 billion industry nationwide. The return on investment for renovations depends on the project.
Adding new bedroom Cost estimate: $172,000 Recovered cost: $100,000 Return on investment: 56% Bathroom renovation Cost estimate: $35,000 Recovered cost: $25,000 Return on investment: 71%
SOURCES: NATIONAL ASSOCIATION OF LANDSCAPE PROFESSIONALS, NATIONAL ASSOCIATION OF REALTORS COMMUNITY IMPACT
Complete kitchen renovation Cost estimate: $80,000 Recovered cost: $60,000 Return on investment: 75%
Overall landscape upgrade Cost estimate: $9,000 Recovered cost: $9,000 Return on investment: 100%
Hardwood ooring resurfacing Cost estimate: $3,400 Recovered cost: $5,000 Return on investment: 147%
In-ground pool addition Cost estimate: $90,000 Recovered cost: $50,000 Return on investment: 56%
New patio Cost estimate: $10,500 Recovered cost: $10,000 Return on investment: 95%
Rise in renovations Real estate agents across the city are seeing a similar trend: With home interest rates hovering around 7%—up from 2%-5% in the last few years— homeowners are feeling the e ects and straying from buying. In 2020, lenders “couldn’t write loans fast enough,” said Chris Luca, a real estate agent with Socius Real Estate. Now, much of the demand has slowed, and the pool of buyers who are able to compete is a lot smaller, Luca said. In fact, interest rates have also slowed renters and ippers. “You also have individuals who bought two, three years ago when rates were very low, and they have these locked-in 30-year loans at interest rates lower than 4%, and they’re happy with that,” Luca said. “So you’re seeing a lot of people second guessing and hesitant
Cabinetto is a full-service cabinet retailer and remodeling business pro- viding services to the Greater Austin area. Owner Adnan Cokadar said con- tractor demand is still present despite interest rates and in ation slowing the market down across the board. “The building is continuing because you have to produce more new homes,” Cokadar said. “The internal immigra- tion—people are still moving to Austin. It’s still attractive.” Financing renovations responsibly Financial experts said they’ve seen an increase in individuals using their home equity, speci cally home equity lines of credit, to nance projects. Home equity is calculated based on the di erence between what a home is worth and how much a homeowner owes for up to 80% of
Charlie Solis works as an estimator, seller and project manager for Austin Jones Company, a remodeling con- tractor based in Austin that serves the Greater Austin area. With over 35 years in the industry, he’s seen rsthand the shift in the market with people opting to make their homes work rather than seeking to move. In ation in general has a ected con- tractors as the cost of materials has gone up over the last few years. How- ever, rising interest rates have also caught up to contractors. Solis said calls have slowed over the past six months or so—something that is not normal going into the summer- time—and homeowners are sitting on their estimates longer than they used to as they decide if the costs are feasible and if the renovations are necessary. Located o Anderson Mill Road,
to move from the home they’re at now.” Brennan Stravlo, a broker associ- ate at Kuper Sotheby’s International Realty, said many sellers also can’t rec- oncile that they lost over $100,000 by not selling last year. As homeowners question whether to sell or stay and renovate, both agents said renovations can increase a home’s value, but that’s not always a feasible feat for sellers, especially if recouping those funds is not a guarantee. “When interest rates were lower, I personally think putting $15,000- $20,000 into a house to make it look pretty went a lot further than it does now,” Luca said. Contractor demand While interest rates are high, so is the demand for contractors and home renovations.
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