- Boston condos: Budgeting for renovations
- Inflationary pressures have caused some homeowners to delay big projects related to home ownership, a new study shows.
- The cost of financing renovations or improvements is also getting more expensive, with interest rates on consumer loans expected to continue ticking upward.
- Homeowners spent an average of about $4,000 on repairs last year, according to the research.
For homeowners, big projects and purchases may be another casualty of rampant inflation, new research suggests.
Overall, 60% of homeowners in a recent survey are less comfortable making large purchases for their home or household because of rising prices, according to Hippo Insurance’s 2022 Homeowner Preparedness Report. And nearly 43% either strongly (14.4%) or somewhat (28.4%) agree that inflation has caused them to delay planned home improvement or maintenance projects.
The poll used to generate the study was conducted April 29 to May 1 among 1,915 U.S. adults, by Ipsos on behalf of Hippo.
With inflation up 8.6% year over year in May — more than expected and the fastest pace since 1981 — households are facing price increases in everything from groceries and gas to rent and clothes, according to the latest data from the U.S. Bureau of Labor Statistics. Generally speaking, demand continues to outstrip supply, which is hampered in many cases by supply-chain issues.
Residential housing construction costs are up 19% from a year ago, according to the National Association of Home Builders. This can translate into higher costs for home improvement projects, depending on the specifics. The housing market appears to be cooling amid higher interest rates and skyrocketing home prices, however; the median list price of a home in the U.S. is $447,000, up 17.6% from a year ago, according to Realtor.com.https://datawrapper.dwcdn.net/jcpWa/1/
Financing renovations or improvements also is getting more expensive, with interest rates expected to continue ticking upward as the Federal Reserve uses higher rates to battle inflation.
However, delaying some projects can be risky. Putting off routine maintenance can lead to bigger repair outlays down the road. Last year, homeowners spent an average of about $4,000 on home repairs, the Hippo survey showed.
While it’s wise to have money set aside for maintenance and repairs, you can also take steps that may help avoid costly fixes. For instance, be sure to know where the main shutoff is for water. If you discover a leaking line from your refrigerator or washing machine, turning off that valve can prevent worse water damage.
“Start with a routine inspection of your home,” said Courtney Klosterman, consumer trends expert at Hippo. “Take note of any visible imperfections, such as cracks in the foundation or damp areas, which could be an early sign of mold.”
From there, Klosterman said, create a list of must-dos and nice-to-dos, so you can work through your list over time.
“Prioritize issues that are known to be costlier to repair such as water leaks and any structural issues around the house,” she said. “Not all home repairs are created equal, so it’s important to look for signs that a project needs to be addressed quickly.”
Updated: Boston Real Estate Blog 2022
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While you might have grandiose renovation visions the Downtown Boston condo you just bought, you may not have the budget to support them. Fortunately, there are countless ways to establish an affordable, feasible plan that will allow you to bring your designs to life. With the right strategies, you can create the look you really want for your unit without spending beyond your means.
Decide How Much You Want to Spend & How You’ll Finance This Project
You should start these efforts by determining exactly how much you want to spend, what you want to accomplish, and how you prefer to pay for everything. If you intend to set an all-cash budget, the related financial planning will be easy. Homeowners also have the option of taking out home equity loans and securing other forms of financing.
Shop around for contractors that are willing to provide free, no-obligation estimates. This will give you a better understanding of the total costs for labor and materials. It will also help you determine which aspects of this project are in line with your short and long-term financial goals and which are not.
Prioritize Your Goals
If your redesign plans far exceed your current budget, you may have to decide which improvements will have the greatest impact on the overall value and appeal of your condo. For instance, rather than switching out the flooring and replacing your cabinets, you can opt to invest in new flooring and buy new hardware for your cabinets instead. Choosing projects that will add the greatest amount of sweat equity to your investment will make it easier to qualify for a home equity loan in the future for funding additional renovations.
Consider Breaking the Project into Manageable Increments
The most effective strategy for completing a major condo overhaul on a relatively nominal budget is breaking down the entire project into a number of manageable, affordable phases. If you’re working with a single contractor, you may even be able to make retention payments. With these, you’ll pay only the costs of each job phase, right before the work begins. In addition to giving you an easy way to sidestep the need for a loan, retention payments will also give you the ability to review and approve each completed phase before rendering payment for new work. The most important thing to remember is that everything doesn’t have to get done at once. Tackling projects like these gradually and as you can afford to will limit their overall costs. You won’t have to pay interest on loan and you can continue to shop around for cheaper labor and materials throughout the work process. Still looking for your dream condo in Downtown Boston? Sometimes, finding something that requires a little elbow grease is a great way to get into a certain high rise Midtown Boston condos. For more information call 617-720-5454.
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