Despite massive gains in home equity since the pandemic, homeowners still pay for most improvements out of pocket, according to a new report from Harvard University's Joint Center for Housing Studies. New analysis of the 2023 American Housing Survey finds that cash funded 63.8% of homeowner improvement spending in 2023. Home equity provided a key source of funding for large and discretionary projects, but owners with lower incomes, limited savings, and limited access to affordable credit are left with few ways to fund major work.
The residential remodeling market soared to new heights in the wake of the pandemic. Improvements to owner-occupied homes surged to $405 billion in 2023, up 29.4% from 2019 after adjusting for inflation. In 2023, 25.8 million households, or 29.7% of all owners, undertook at least one improvement project. Including those with no projects, homeowners spent an average of $4,700 on improvements in 2023.
