Limited Inventory + Lower Interest Rates = More Home Renovations

Harvard’s JCHS Forecasts Growth In Home Improvements for 2025
Despite Higher Mortgage Rates, Record Home Equity Is Making It Easier To Borrow
The Economy Continues To Show Strength, Especially In The Lower Half

Admittedly, I’ve got little (ok, zero) ability to perform home improvements on my home. Yet, my wife has demolished our bathrooms with a sledgehammer on occasion and has painted rooms just like my 94-year-old father-in-law still does. Yet, I was proud of my ability to livestream my new bird feeder with video and motion detection from 35,000 feet on a recent airplane trip to California. As exciting as that sounds, we’ve also got the perfect storm brewing for an uptick in home improvement in 2025 for current and new homeowners: lower (not low) interest rates, still inadequate inventory despite the increase, growing home equity, and a premium on already upgraded homes.

I’ve long followed Harvard’s Joint Center For Housing Studies and even had their director as a guest on my long-ago podcast. Their quarterly remodeling analysis shows an expected uptick in LIRA (Leading Indicator of Remodeling Activity – not the Italian currency). The following chart shows how improvements and repairs have been sliding all year, but JCHS is projecting an uptick in activity next spring.

U.S. economic conditions continue to be robust:

Final Thoughts

And it all makes sense. Home prices are rising because listing inventory is still restrained, so it’s still tough to get the house you want even though wealth is higher, especially for the bottom 50%. Despite higher interest rates than a few years ago, they have fallen in the past year, and home equity is at record levels, so homeowners can borrow to personalize the home they already own.

Luxury Agent Forum – October 30th

I’m looking forward to speaking at Luxury Roundtable’s exclusive summit in New York on Oct. 30 on the outlook for luxury real estate. Topics include global luxury real estate demand and supply, inventory, feeder markets, regulation, market analysis, design, décor and architecture, HNW and UHNW buying and selling behavior, marketing, developments, best practices in lead gen and referrals, AI and tech, and what works for luxury brands and retailers—experts from the leading luxury real estate networks, brokerages, and brands worldwide. Expect plenty of networking and knowledge sharing. I also have a special speaker discount that gives you 20 percent off the registration fee. Please type in LUX20 when you register for the event: