The housing market in the United States continues to heat up for both new and existing homes. CNBC reports that data from the S&P CoreLogic Case-Shiller National Home Price Index show that housing prices in March 2021 rose by 13.2 percent compared to March 2020, whereas housing prices in February 2021 rose by 12 percent from February 2020.
The increase in March shows 10 consecutive months of price acceleration and is the highest annual increase since December 2005. It is also among the highest in the past 30 years that the Index has existed.
April Prices and Demand Continued to Soar
According to estimates from the U.S. Census Bureau released jointly with the U.S. Department of Housing and Urban Development, annual sales in April 2021 of new single‐family houses were at a rate of 863,000 which was 48.3 percent higher than the rate of 582,000 in April 2020. Available new houses for sale numbered 316,000 at the end of April, representing supply for 4.4 months with the current selling pace. New houses sold in April 2021 had a median price of $372,400 and an average price of $435,400.
Data from YCharts show that the median sales price of existing homes in April 2021 was $341,600. This represented an increase of 4.69 percent from $326,300 in March 2021 and 19.11 percent from April 2020. According to the National Association of Realtors (NAR), the total number of new and existing houses available for sale in April numbered 1.16 million units, representing supply for only 2.4 months with the current selling pace. These are almost record lows since NAR began tracking the supply of single-family homes in 1982.
Demand is aggressive, with properties sold typically 17 days from listing compared to 18 days in March and 27 days in April 2020. There was a 2.7 percent decrease in the annual sales rate of existing-home sales in April compared to March which NAR attributes to the low housing supply. The annual sales rate from January to April 2021 increased by 20 percent, though, compared to the same period in 2020.
Continuing Trend of Renovations
While buyers are busy seeking and snapping up homes, many homeowners are busy sprucing up their property. Those who have decided to stay in their homes are making improvements based on what they would like to see if they were to buy a new home. New homeowners who bought a fixer-upper are working on the necessary repairs to make it live up to their dreams.
The Harvard University Joint Center for Housing Studies’ Improving America’s Housing 2021 report shows that the home remodeling market’s annual expenditure rose to $433 billion in 2021 from $419 billion in 2020 and $406 billion in 2019. The Harvard University Remodeling Futures Program’s Leading Indicator of Remodeling Activity (LIRA) forecasts a year-on-year increase in the market’s growth to 4.8 percent in the first quarter of 2022 from 3.8 percent at the end of 2021 and 3.5 percent at the end of 2020.
Associate Project Director Abbe Will of the Center’s Remodeling Futures Program attributes the rise in annual remodeling spending to homeowners now preferring to hire professionals instead of doing projects themselves. Managing Director Chris Herbert of the Joint Center for Housing Studies expects that in addition to the usual replacement and repair projects, homeowners will embark on more costly non-essential improvements as the economy recovers.
Remodeling to Sell Higher
All home improvements increase the value of a property, but some projects have higher returns than others. It will be wise for homeowners doing renovations to prioritize work that will add to the curbside appeal of the property in case they decide to sell later. According to the Wall Street Journal, a study published in the Journal of Real Estate Finance and Economics analyzed sales from 88,980 properties in metropolitan Denver and found that in the same neighborhood, a property with exceptional curb appeal sold for an average of seven percent higher than a similar property with no curb appeal.
If the property has a fence and gate, then that is what prospective buyers first see, and they better be attractive. With the soaring cost of lumber these days and the unattractiveness of vinyl, it is better to choose composite material such as a Trex gate and fence. Composite material made of recycled wood and recycled plastic is also sustainable and will earn high points from buyers who value sustainable living.
The 2021 Cost Vs Value Report of ©2020 Hanley Wood, LLC lists several home renovation projects and what percentage of the cost is recouped upon selling the property. Projects that earn back more than 50 percent of cost also add to the curbside appeal, such as replacement of roofing, siding, entrance door, windows, and garage door, as well as the addition of a deck and a manufactured stone veneer.
Home remodeling is a satisfying venture for homeowners because they will be enjoying the results day in and day out. It is also a win-win endeavor because it is an investment for their wealth as it maximizes the home’s resale value.