From splurging $337 billion in 2020 to $427 billion by the end of this year, the home addition and building industry has experienced an unprecedented boom. However, with murmurs of an approaching recession, is it still wise to pour thousands into polishing up your humble abode?
When it comes to increasing home value and space, one of the best solutions can be adding an addition. But is 2023 the right time for this type of project?
We will explore factors such as current home values in your area, financing availability, construction costs, and more—evaluating if 2023 really is the ideal year for building an addition onto your home or not.
Is Home Addition Worth It In 2023?
Although the industry is expected to see a 6.5% increase in spending over the next few years, this growth pales in comparison to the blistering 17.8% burst of the past. Rising inflation is tightening purses, and homeowners are wary of embarking on major renovations.
It’s a turbulent time for the remodeling sector, but it’s vital to keep an eye on the ever-changing market trends.
Navigating the world of trade labor can be a tricky business, and the U.S. has been grappling with a shortage of skilled workers for some time now. However, the pandemic has thrown a wrench in the works, and the surge in renovating has only made matters worse.
There may be a silver lining on the horizon. With the decline in people looking to renovate, finding the skilled labor necessary for your next project might become a tad less grueling.
Sadly, many contractors are still backed up for months on end, but with new home construction at an all-time low, this could be an opportunity for remodelers to snag some free labor.
Factors to Consider Before A Home Renovation or Addition
The Current Economy
The success of your home improvement project hinges on a key factor: the state of the economy. Not sure what that means? It’s simple. When the economy is thriving, home construction and renovation projects skyrocket.
This surge in demand increases the costs of building materials and labor, making a home addition a costly investment. However, if you’re willing to take the risk, investing in a home addition during a strong economy can lead to impressive returns.
So if you’re feeling confident about the state of the economy, now may be the perfect time to start planning that dream addition!
The cost of adding onto your home can be greatly affected by interest rates. When rates are low, you can score lower borrowing costs and funding is easier to come by.
But with rising interest rates, it can be tricky to afford the added expense. Interest rates have a great impact on the home remodeling sector, so be sure to always research the trends.
Luckily, experts predict that 2023 will be a great year to go for that home addition you’ve been dreaming of, with interest rates expected to stay low.
Housing Market Trends
When considering a home addition, it’s crucial to think about the state of the housing market. If the market is in a slump, it might not be the most profitable time to invest. But if the market is strong, adding on to your home can not only boost its value, but also yield a strong return on investment.
So before breaking out the hammer and nails, look closely at the housing market and make an informed decision.
Follow the experts as they identify future turning points and help you stay on top of housing studies. The Joint Center for Housing Studies at Harvard University is a great resource.
Permitting and Zone Regulations
Don’t let changes in zoning or permitting catch you off guard and impact the feasibility and cost of your project. With potential changes looming in 2023, it’s crucial that you do your research and stay on top of any developments.
The world of home renovation has seen some ups and downs over the past few years. While the prices of building materials skyrocketed only to drop back down, they still remain higher than they were in pre-pandemic times.
Remodelers are also still facing the struggle of supply chain issues, albeit not as severe as during the height of the pandemic. Waiting weeks, and sometimes even months, for appliances, cabinets, and other materials has become commonplace.
The good news is that it’s the perfect time to invest in your current home rather than try to navigate the turbulent waters of the housing market.
Finding the right home builders can make or break your home improvement projects. It’s not just about the cost, but the quality of work and craftsmanship.
While a surplus of contractors may sound like a good thing, you also want to ensure that they are reputable and reliable. Don’t jump into a project blindly; do your research and find a contractor who perfectly fits your project needs.
At MGS Contracting Services, we’re committed to turning your dream home into a reality without any stress or pressure. Work with a pro that listens to your unique vision and then goes the extra mile to bring it to life in record time. Your satisfaction is our top priority!
What Is The Inflation Reduction Act?
This legislation offers significant tax credits for those who choose to install energy-efficient products like solar panels, windows, and HVAC systems. You can even get credits for purchasing energy-efficient properties or building new, eco-friendly homes.
While you’ll need to make some investments upfront, the long-term savings and positive impact on the environment make it well worth it.
Just make sure to work with qualified contractors and keep track of product identification numbers to qualify for the rebate.
The Bottom Line
Remodeling a home is always a big decision and it is important to consider many different factors before making such an investment.
2023 might be the perfect year for you to upgrade your property into one that suits your ever-changing needs with an additional addition.
It all comes down to budgeting and determining if this kind of project will add enough value and enjoyment to warrant the costs. The Inflation Reduction Act could also help make financing more affordable or reduce the amount owed in interest over time.
Ultimately, it is up to the homeowners to decide if now is the right time for them to get an additional home addition.