Homeowners are grossly underestimating home renovation costs. It turns out, home renovation costs for 2020 are skyrocketing.
In a recent survey by Discover, nearly 80 percent percent of Americans underestimated how much it would cost to remodel a kitchen. They guessed it would cost around $10,388 for a kitchen remodel when the average cost is $19,920, 48 percent more than they thought.
It’s possible homeowners are unsure of how much labor and materials actually run for certain home projects. If homeowners don’t research and budget appropriately for home renovation, maintenance, and repair project costs they’ll likely spend much more on a home project than they anticipated.
Home Renovation Costs for 2020
Homeowners underestimated renovation project costs by an average of 46 percent. Here are the five most underestimated project costs:
Actual Cost: $19,920
Average Perceived Cost: $10,388
Difference: $9,532 or 48 percent
Actual Cost: $9,274
Average Perceived Cost: $6,371
Difference: $2,903 or 31 percent
Actual Cost: $6,919
Average Perceived Cost: $4,499
Difference: $2,420 or 35 percent
Actual Cost: $6,692
Average Perceived Cost: $1,766
Difference: $4,926 or 74 percent
Actual Cost: $5,233
Average Perceived Cost: $3,047
Difference: $2,186 or 42 percent
Why the shortfall? Discover suggests homeowners might not remember to include the cost of doing the work itself. Labor can account for over one-third of the overall cost of a home renovation project, and a recent labor shortage appears to be driving those costs up even further.
How Do Homeowners Budget for Home Renovation Costs?
Even if they’ve spent a year planning for a home renovation project, only 37 percent of homeowners set aside a part of their monthly budget to save for upcoming home repairs and improvement projects. How are the other 63 percent of homeowners covering costs for home improvement projects?
Homeowners without savings for home repairs and improvements would take out a personal loan to pay for a new roof or deck. For smaller projects, like a minor kitchen remodel, replacing windows or a bathroom remodel homeowners would use a credit card, home equity loan or line of credit, other savings or cash out an investment to cover costs.
Plan Now: Your Next Home Renovation Project is Around the Corner
It’s only a matter of time before your home will need a major repair or renovation. Specifically, roofs need to be replaced every 20 to 30 years. Plumbing problems like burst pipes can also lead to other problems like water damage and mold growth. Similarly, foundation repairs might require the installation of steel beams to hold up bowing or cracked walls.
The best way to prepare for planned maintenance and unexpected repairs is to build them into your budget. You made a huge investment in your home and it’s worthwhile to set enough money aside to keep it in good shape.