Amidst soaring housing costs, renovations are increasingly popular, but a new study reveals a troubling financial trend: a majority of homeowners are going into debt for renovations they later regret.
Clever Real Estate’s survey of 1,000 homeowners highlights the prevalence of budget overruns, financial strain, and ultimately, dissatisfaction with the results.
The rising cost of home improvements
With high home prices and mortgage rates discouraging moves, many homeowners are choosing to renovate.
Clever Real Estate found over 60% prefer remodeling to relocating.
This trend is fueling a surge in home improvement spending, with 40% of homeowners planning to invest $10,000 or more in 2025.
However, this ambition often clashes with reality.
Nearly 80% of homeowners exceeded their budget on their last renovation, and a startling two-thirds incurred debt to finance these projects.
This year, 45% of homeowners spent $5,000 or more on renovations, with 36% exceeding $10,000.
Almost half (44%) anticipate spending even more this year compared to last.
The survey reveals that budget overruns are widespread, with more than three-quarters of homeowners experiencing them.
For nearly half of these, overspending amounted to at least $5,000, and 35% exceeded their budget by $10,000 or more.
Faced with these escalating costs, 32% of homeowners halted projects prematurely, while 63% resorted to borrowing, often facing financial consequences like difficulty paying credit card bills (36%).
The allure of DIY and the risk of regret
The survey reveals a strong do-it-yourself ethos, with 94% of homeowners undertaking major renovations and 93% tackling minor ones within the past five years.
Popular major renovations included bathroom remodels (37%), interior painting (33%), and HVAC upgrades (30%).
Cleveland-based real estate agent Geoffrey Hoffman told Associated Press that in markets with older homes, adding central air conditioning offers a strong return on investment while enhancing homeowner comfort.
Common minor renovations included faucet replacements (36%), new light fixtures (35%), and minor kitchen updates (34%).
Paradoxically, some minor renovations offer better value than major ones.
Data suggests minor kitchen remodels recoup approximately 96% of their cost upon resale, while major kitchen remodels typically recoup only 38%.
Similarly, garage door upgrades offer nearly double the return on investment, yet only 19% of homeowners have undertaken this project in recent years.
While 92% of homeowners reported positive impacts from renovations, a significant 74% expressed regrets.
Overspending (24%) and lengthy project timelines (22%) were the most common complaints.
Furthermore, nearly half of renovators preferred their homes before renovations, with younger generations (millennials and Gen Z) significantly more likely to experience regret (82% and 89% respectively) compared to baby boomers (51%).
The DIY dilemma: saving money vs. losing value
The desire to save money drives many homeowners towards DIY projects.
Popular choices include interior painting (62%), light fixture installation (61%), and deck sealing/staining (59%).
A surprising number expressed willingness to tackle complex projects like roof replacements, electrical work, additions, and plumbing upgrades.
However, this cost-saving approach can backfire.
Poorly executed DIY renovations can diminish home value, as Hoffman warns:
New isn’t always better. An older kitchen in good condition is better than a cheaply renovated new kitchen installed with poor workmanship.
He emphasizes that subpar DIY work and questionable design choices are frequently detrimental to home value.
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