High interest rates and home prices are driving homeowners throughout North Carolina to invest in home renovations instead of moving.
They’re adding second stories, knocking down walls and renovating kitchens, overhauling outdoor living spaces and constructing new primary suites.
By the numbers: Roughly 61% of homeowners with mortgages in North Carolina have a rate of 4% or lower, per Redfin data shared with Axios. Meanwhile, the average 30-year fixed mortgage rate for a new loan hit 7.49% last week.
- That tends to lock homeowners in place, leaving buyers with few homes to choose from, Axios has reported.
Why it matters: For many, renovating makes more sense financially than moving if they’re seeking more room or an upgrade. The surge in demand for home renovations, which picked up during the pandemic, provides a boon to the whole industry — from general contractors to home improvement retailers.
What’s happening: Charlotte-based general contractor Andrew Roby has seen a “significant shift” in homeowners who want to renovate these days, says Jodi Brickley director of project management – residential construction.
- There’s been an increase in requests for interior renovations — especially for kitchens and bathrooms.
- Homeowners are “reimagining underutilized areas within their homes,” such as unfinished spaces, Brickley says.
- People continue to prioritize outdoor living spaces, choosing to add pools, gyms, decks, and all-season porches.
- “We’re witnessing a surge in requests for adding square footage, especially in the form of bonus rooms and primary bedroom suites. This reflects a desire for more functional living areas,” Brickley says.
- Clients of Andrew Roby also prioritize exterior upgrades, such as refreshing exterior paint.
Of note: Andrew Roby manages projects throughout the Carolinas, including in Boone and Asheville, where many clients have second homes.
Yes, but: These projects aren’t cheap. The cost of materials remains high, although lumber prices have fluctuated.
- Projects Andrew Roby has lead range from $10,000 to in the millions, Brickley says.
Between the lines: It’s tough to estimate the cost of a renovation even by price per square foot. Overhauling a 1950s ranch is far different from adding onto a sprawling home from 2005, says local architect Alison Hall.
- Roughly 90% of her clients are locals who live in the city of Charlotte — relatively close to amenities and services like doctors, offices and shopping.
- Many of her clients want to stay in their current location but want more space.
“For the most part [my clients] love their neighborhood and don’t want to leave,” Hall says. If someone moved into Sedgefield five years ago, for instance, they might not be able to afford a bigger house in the neighborhood, given how fast it’s grown in recent years.
- “That’s why a majority of people … they bought long enough ago that even [with] high renovation costs, it’s cheaper than buying a new house that fits their needs,” she adds.
Zoom out: Home-remodeling activity nationwide could eventually start to slow down, as Ashley Fahey of The National Observer recently reported. Harvard University’s Joint Center for Housing Studies forecasts a 6% decline in remodeling spending in 2024 compared to spending in 2023, per Fahey.
- This could trickle down to home-improvement retailers like Mooresville-based Lowe’s, which anticipates a “softness” among DIY customers during the second part of this year, CEO Marvin Ellison recently told reporters.
But for now, industry professionals are still experiencing strong demand for home renovations in Charlotte. “I haven’t seen a slowdown,” says Hall, who adds that she’s consistently booked six months out for new projects.
Zoom in: Here’s a look at an Andrew Roby kitchen renovation in Charlotte — the last image is what the kitchen look like pre-renovation. The designer on the project was Natalie Fey with Celadon Interiors, and the architect was Houghland Architecture. Photos by Dustin Peck.