Some 36 million homeowners in the United States plan to renovate their property in the next 12 months, according to a Bankrate.com survey. Better yet, the greatest single share of those projects – 52 percent – will be devoted to “exterior or yard renovations” such as driveways, decks, patios, pools, landscaping or fencing, the company reports.
The Bankrate.com survey was conducted by Princeton Survey Research Associates International and consisted of telephone interviews March 17-20 with 1,000 residents of the continental United States.
While the findings were generally positive for landscaping companies that handle residential work, the results also pointed to a couple of challenges. First, it was the 18- to 29-year-old group that was most intent upon doing home renovation work in 2016, the Bankrate.com survey showed. Not surprisingly, home ownership is lowest among millennials.
Mike Cetera, a personal loans and credit analyst at Bankrate.com, noted that millennials are also more likely to be first-time homebuyers.
“That means they probably have very little equity,” Cetera said in a telephone interview Wednesday, so equity financing won’t be available to pay for the renovation work. “A lot of these young people still have considerable student-loan debt hanging over them; so, as a group, they are probably more credit-squeezed than any other.”
While a personal loan for landscaping work is another option for young homeowners, Cetera said millennials “must be extremely careful” not to take on additional debt unless they can make it work in their budgets.
“Of course, on the bonus side, if it’s a personal loan, they’re not going to take your home away” if you default, he said.
The Bankrate.com results reinforce the findings of a January survey by the Remodeling Futures Program at the Joint Center for Housing Studies of Harvard University.
The earlier research showed that expenditures for home improvements should see healthy gains in 2016, according to the Leading Indicator of Remodeling Activity (LIRA). “The LIRA projects annual spending growth for home improvements will accelerate from 4.3 percent in the (just-ended) first quarter of 2016 to 7.6 percent in the third quarter,” the Joint Center reported on Jan. 21.
Still, for that spending to occur, Cetera says, homeowners will need not only access to credit but “access to labor.”
Unless the renovation project is large enough, he said, it may be difficult to find a professional landscape contractor that is willing to take on the job.
In addition to providing personal finance content on its website, including a variety of calculators and tools, Bankrate.com aggregates rate information from more than 4,800 institutions on more than 300 financial products.