According to a new survey by American Express, the majority of homeowners (53%) believe a seller's market is two or more years away, yet investing in their current home remains a priority. In fact, 62 percent of homeowners plan to embark on home improvement projects in 2010 and spend an average of $6,200 on enhancements.
The latest monthly American Express Spending & Saving Tracker investigated consumers' sentiments toward the current housing market, outlook for the future, and intentions to enhance property appearance and value. The research sample of 2003 adults included the general U.S population, as well as two subgroups – the affluent and young professionals.
Investment in Home Improvement
Eighty-five percent of homeowners consider their homes to be their most valuable asset and are more than twice as likely as renters to invest in home improvement projects this year (62% versus 24% respectively). Young professional (86%) and affluent (72%) homeowners will embark on these projects more so than the general population of homeowners this year. On average, across the three homeowner groups, the amount spent on property enhancements will be:
- $6,200 among the general population
- $6,100 among young professionals
- $11,500 among affluents
Nearly seven in ten homeowners (68%) will pay for improvements with cash, check or savings, followed by using a charge card or credit card with the intent of paying the balance off in full (28%), and using a tax refund (10%), indicating that consumers are largely financing home improvements projects with money they have versus various forms of loans, such as home equity lines (9%) or revolving balances on credit cards (7%).
Of the home improvement plans being tackled by homeowners:
- The majority (53%) involve indoor remodeling, with cosmetic work (36%), redoing a room (25%), and installing new flooring (14%) topping the list.
- Nearly one in three (29%) homeowners plan to remodel their outdoor spaces and more so among young professionals (55%) and affluents (35%)
- More than two in five (43%) homeowners are making a conscious effort to invest in green solutions when choosing home improvement materials.
"It's clear from this month's survey findings that Americans' most prized possessions are their homes and they are committed to continuing to enhance its appearance and value in spite of the softer real estate market," said Pamela Codispoti, American Express senior vice president and general manager, Cardmember Services. "However, Americans are doing so in a responsible way by funding projects within their financial means. This signals that consumers are following through on their previously stated intentions to exercise more financial discipline in 2010 as it relates to home improvement."
Hire a Professional vs. Do-it-Yourself
While some (14%) homeowners are jumping on the do-it-yourself trend and plan to tackle projects themselves, a greater number (47%) plan to hire professionals to get the job done. More than half (54%) of affluents and two-thirds (36%) of young professionals will spend to use a contractor for at least some of the work. Thirty-eight percent of homeowners intend to enlist the help of family and friends.
Enhancing Appearance Top Motivator
More than half of affluent (56%) and young professional (54%) homeowners and just under half of the general population (49%) of homeowners list improving their home's appearance as the top reason for making property enhancements. Other reasons for improvements among homeowners include:
- The project(s) is/are necessary and can no longer be put off (19%)
- To increase the value of their home (11%)
- Preparing their home to go on sale (5%)
Seller's Market Two or More Years Away
When exploring homeowners' views about the real estate market, survey results show that the majority (53%) of homeowners feel the real estate market will be at its best for selling in two or more years. This is evident in the fact that the majority (52%) of homeowners are not confident they would get their asking price today. However, according to homeowners, when it comes to purchasing a home, 47 percent of the general population, 65 percent of affluents and 62 percent of young professionals think the real estate market is at its best now.
Young Professionals Willing to Negotiate to Get a Deal Done
More than half (55%) of young professional homeowners are confident they would get the asking price for their house at this point in time, yet they (31%) remain more flexible than the general population of homeowners (21%) in willingness to sell their house for less than the asking price. In comparison to the general population of homeowners, young professional homeowners are also more willing to negotiate to close a real estate deal. Eighty-seven percent of young professional homeowners are willing to make concessions to sell their homes, compared with 60 percent of the general population and 70 percent of affluent homeowners. Aside from lowering their asking price, young professional homeowners show more flexibility than the general population of homeowners in the top three concessions listed:
|CONCESSION||YOUNG PROFESSIONAL HOMEOWNERS||GENERAL POPULATION OF HOMEOWNERS|
|Offer to include appliances||65%||48%|
|Offer to make or pay for requested repairs||54%||29%|
|Pay for buyer's closing costs||38%||13%|
Additionally, young professionals are willing to make more sacrifices to maximize their housing dollars if necessary. For example, one in three (33%) are willing to rent out some or all of their property in order to better stretch their budgets, compared to just 10 percent of the general population and 14 percent of affluents.
About the American Express Spending & Saving Tracker
The American Express Spending & Saving Tracker research was completed online among a random sample of consumers aged 18+. The research sample of 2,003 adults surveyed the general U.S. population, as well as two sub-groups – the affluent and young professionals. Interviewing was conducted by Echo Research between March 30 and April 2, 2010. Overall, the results have a margin of error of +/- 2.2 (or 4.2 among affluents and 4.3 among young professionals) percentage points at the 95 percent level of confidence. For access to previous American Express Spending & Saving Tracker results, please visit americanexpress.com/aboutus.
About American Express
American Express is a global services company, providing customers with access to products, insights and experiences that enrich lives and build business success. Learn more at americanexpress.com and connect with us on facebook.com/americanexpress, twitter.com/americanexpress and youtube.com/americanexpress.