A Phil Hall Op-Ed: The good folks at LendingTree (NASDAQ:TREE) released a survey of homeowners regarding their ongoing or planned renovation projects for their residences. If these results are any indication, the decline of existing home sales that defined this year will continue well into 2024.
The survey polled 2,162 American homeowners from May 17-19, with 68% of respondents reporting they have either started or completed home improvement projects while 63% planned to begin one in the next year. Among the age demographics, the millennial homeowners were the ones most active in channeling their inner Property Brothers, with 78% working on upgrades in the past year and 72% planning to do so in the next 12 months.
Admittedly, most of these projects are on the mild side: 61% of the renovation-focused respondents be involved with interior painting, while 54% will work on landscaping and 47% will upgrade their bathrooms.
But here’s where things get thorny: when asked why they are doing these projects, 36% of respondents said they need to make repairs as their house ages, 27% said their improvements were relatively small, but only 21% said they’re doing the repairs in preparation to sell their home. Across the demographics, millennials were the most likely to be preparing to sell at 29% and baby boomers were the least likely at 10%.
Of course, this doesn’t necessarily mean that non-renovated homes will not be listed – there are plenty of broken-down properties on the market, and along with buyers who are willing to invest in these fixer-uppers. But the fact that roughly one in five homeowners are fixing up their properties for a potential sale would seem to affirm that the ongoing shortage of existing home sales will be with us well into 2024.
The National Association of Realtors (NAR) reported that existing home sales data from July were down 16.6% from one year earlier. Among property types, existing single-family home sales fell by 16.3% from the previous year while existing condominium and co-op sales dropped by 19.2% since July 2022. NAR Chief Economist Lawrence Yun noted, “Two factors are driving current sales activity – inventory availability and mortgage rates. Unfortunately, both have been unfavorable to buyers.”
If the LendingTree survey is statistically accurate and nearly two-thirds of American homeowners are planning a home improvement project in the next year – but little more than one-quarter are doing for sale purposes – that means there will be a continued lack of existing properties for sale. While there appears to be a rising level of new home construction, it will not be enough to fill the void created by the absence of existing homes. As a result, an inadequate housing inventory will keep home prices at record highs.
With these statistics in mind, real estate agents are going to be in for a challenging 2024. Of course, the profession has dealt with worst scenarios and continued to carry on. Perhaps Winston Churchill had the best advice for dealing with dire situations like this: “If you’re going through hell, keep going.”
Phil Hall is editor of Weekly Real Estate News. He can be reached at email@example.com.