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Broader Economy Suffered in 2020 While Home Improvements Thrived

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Economics

Broader Economy Suffered in 2020 While Home Improvements Thrived


March 26, 2021
Home improvement
Photo: WONG SZE FEI

The U.S. economy dipped 3.5% in 2020 as home improvement project spending increased by 3%, according to Harvard University’s Joint Center for Housing Studies. Home improvement and repair spending increased to almost $420 billion, likely due to homeowners adjusting their spaces to meet new working and schooling from home needs. Remote work helped to impact more Americans moving to less dense, more affordable areas, which also drove up the need for home improvement projects. But due to fears from allowing contractors into their homes, Americans took up DIY projects at a significantly higher rate.

“But in 2020, amid concerns about having contractors in the home, DIY projects gained new popularity, and remodeling activity shifted to lower-cost metros where larger shares of younger households—traditionally the most active do-it-yourselfers—could afford to own homes.” [Interactive Chart] In late March of last year, 60 percent of respondents to one homeowner survey had begun at least one DIY maintenance or improvement project in the previous two to three weeks; by early May, the share had jumped to nearly 80 percent. Additionally, during the pandemic, many urban renters purchased homes—a transition that often begins a new cycle of improvement projects—in outlying communities in search of safer living conditions, more space, and lower housing costs.

For many homeowners with low incomes, however, keeping up with mortgage payments—let alone home maintenance—was especially challenging last year. And while 68 percent of the lowest-income owners spent less than $500 on improvements and repairs in 2019, as a group, they are an important segment of the remodeling market, contributing around 10 percent of national spending each year. The ability of these owners to maintain their typically older, more affordable homes is critical not just for their safety and comfort, but for the preservation of the country’s aging housing stock.

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