High mortgage loan interest rates have had an interesting effect on the housing market, especially in how they've effectively deterred many homeowners from selling and moving. With increased borrowing costs, many will opt to stay in their homes to avoid the financial strain of higher monthly payments.
It's no surprise that experts expect to see a slowdown in housing turnover; however, in exchange, we expect to see these same first-time homeowners investing in bigger projects that bolster the value of their first home and make it more accommodating for their family and lifestyle:
"We're seeing that those who bought starter homes during the pandemic and locked in low interest rates have no incentive to move anytime soon," shares JonBostock, a former GE executive and current CEO of Leaf Home. "We’ll see young homeowners invest in remodeling or significant maintenance projects they previously ignored, thinking they might not stay long."
Typical Starter Home Improvement Projects
- Putting a fresh coat of paint on the walls for aesthetic appeal
- Making minor aesthetic upgrades to kitchens, bathrooms, and exteriors
- Creating DIY storage solutions
- Updating hardware and lighting fixtures (often a DIY installation)
- Installing new flooring or carpets
- Incorporating smart home technology, like smart thermostats
Next-Level Projects You Don't Usually See From First-Time Homebuyers
Kitchen and Bathroom Renovations
A major kitchen remodel is a top investment. Homeowners will seek to incorporate modern appliances, new countertops, and modern kitchen cabinets. They may also opt to completely reconfigure the space (even knocking down walls) to make the cooking and entertaining area ideal for their living style.
Similarly, a bathroom remodel can improve functionality in a much different way than ordinary bathroom updates. Expect to see them seeking new vanities, heated flooring, tile, tub surrounds, and light fixtures.
Energy-Efficient Upgrades
Improving energy efficiency with features like new windows, insulation, or solar panels not only reduces utility bills and energy consumption but also increases a home's market value in the long run. Homeowners may be more apt to lock in extra savings with tax rebates and incentives.
Home Addition or Extension
Adding extra livable space, such as a 3rd bedroom, home office, or expanded living room, provides both immediate utility and long-term value. It's no surprise that adding more square feet is an investment worth pursuing when first-time homeowners realize they may need extra space without moving.
Finished Basement
Transforming an unfinished basement into a usable and well-designed living space adds valuable square footage. A finished basement can serve as a recreational area, home office, or additional bedrooms, enhancing the overall functionality and appeal of the property.
Deck or Patio Addition
Creating an outdoor space with the addition of a new deck or patio immediately expands a home's usable area. For homeowners who want an outdoor living space for entertaining, relaxation, and enjoying the surrounding environment, this is a desirable investment.
Swimming Pools
The return on investment for a new swimming pool is questionable, but for homeowners looking to upgrade their starter home into a space with all the bells and whistles, they're ready to dive in. While stock tank pools are popular and affordable, homeowners who are ready to invest will consider in-ground pools or Modpools (pools made of upcycled shipping containers).
Curb Appeal Enhancements
Exterior projects, including landscaping, updating a driveway, installing new windows and doors, and adding exterior accent lighting can contribute to the property's first impression and overall value. They aren't projects many homeowners would pursue for a short-term residence, but they'll invest when they want to love where they live.
