- Housing Market Pressures
High Mortgage Rates: Current mortgage rates are near 7%, making new home purchases financially unattractive.
Record Home Prices: Starter homes in many cities approach $1 million, pushing buyers away from the market.
The “Lock-In Effect”: Many owners hold pandemic-era mortgages at 2–3% rates, leaving them with no incentive to sell and take on higher interest debt.
- Why Renovation Wins Over Relocation
Equity as a Resource: Homeowners are tapping into home equity via HELOCs (Home Equity Lines of Credit) to fund projects without selling.
Financial Advantage: On average, renovating costs $49,000 less and expanding a home costs $79,000 less than moving into a new one.
Predictable Payments: Financing renovations with equity often means smaller, manageable monthly installments compared to taking on a new mortgage.
- Who Is Renovating Most?
Millennials & Gen Z Leading the Charge:
60% of millennials and 56% of Gen Z homeowners plan renovations in 2025.
Projects often target kitchens, bathrooms, and outdoor living areas, where upgrades deliver lifestyle and resale value.
- Broader Renovation Trends
Spending Surge: U.S. home improvement spending hit $513 billion in Q1 2025 and is projected to rise to $526 billion by Q1 2026.
Equity Wealth Boom: Americans collectively hold $35 trillion in tappable home equity, fueling the remodeling wave.
- Key Drivers Behind the Shift
Driver Impact
High mortgage rates Prevents moving, makes staying more attractive
Record-high home prices Out of reach for many buyers
Equity accessibility Homeowners use HELOCs for projects
Cost efficiency Renovation is significantly cheaper than moving
Generational preference Millennials & Gen Z value upgrades over relocation
Equity growth $35T available to invest in improvements
- Conclusion
With soaring mortgage rates, unaffordable housing prices, and record equity wealth, homeowners are choosing to remodel rather than relocate. This shift reflects both financial pragmatism and lifestyle aspirations, especially for younger generations who see renovation as the best way to upgrade without sacrificing affordability.