Homeowners Fund Remodels With Personal Savings

In 2024, 84% of homeowners funded their renovation projects using personal savings, even as the median cost for a small kitchen remodel jumped 9% to $35,000, according to Houzz. This isn't just a trend; it's a deliberate strategy to fortify their primary asset, often including critical upgrades like energy efficiency improvements.

Renovation costs are climbing and project volume is slightly down, yet homeowners are pushing forward by overwhelmingly self-financing their projects. This commitment suggests a deeper market resilience than mere economic indicators might imply.

The remodeling market will likely continue to grow, driven by homeowners willing to absorb costs and leverage personal wealth. This could make home equity less accessible for those without significant liquid assets, creating a two-tiered market for home improvement.

A Resilient Market Despite Shifting Tides

• USD 527.36 billion — The U.S. residential remodeling market was estimated at this value in 2023, according to Grandviewresearch.
• 4.6% CAGR — The U.S. residential remodeling market is projected to grow at this Compound Annual Growth Rate from 2024 to 2030, according to Grandviewresearch. This is historical data from 2024.
• 54% — This percentage of homeowners undertook renovation projects in 2024, a slight decrease from 56% in 2023, according to Houzz. This is historical data from 2024.

Despite a slight dip in homeowner participation—from 56% in 2023 to 54% in 2024—the market remains robust, projected for steady growth. This suggests a core group of homeowners is committed to property improvement, even as others pause. The dip in volume, coupled with rising market value, implies that while fewer projects might be initiated, those underway are larger or more complex. Contractors should focus on quality and value to capture this dedicated, high-spending segment.

The Self-Funded Renovation Imperative

Note: HousingWire and Houzz report slightly different percentages for self-financing, suggesting variations in survey methodology or timing, but both confirm the strong trend.

Homeowners are committed to improving their properties, even if it means absorbing higher expenses. Despite rising costs—like a 13% jump for small primary bathroom remodels to $17,000—38% of homeowners absorb these increases rather than scaling back. The preference for self-funding over traditional debt is clear, with Houzz reporting 84% of homeowners using savings in 2024, compared to HousingWire's 70%. This is historical data from 2024. A market where financial independence dictates project viability, and contractors must demonstrate clear value for direct homeowner investment, as reliance on external financing appears to be a secondary consideration for many.

Beyond Aesthetics: Practicality and Personal Wealth Drive Decisions

Homeowners are looking beyond aesthetic upgrades. 17% are considering or planning an Accessory Dwelling Unit (ADU), with 39% of those for family care, according to HousingWire. This move to functional additions addresses evolving household needs like multi-generational living and caregiving responsibilities. Investing in such significant, often self-financed, structural changes shows homeowners prioritize practical, long-term solutions over incurring additional debt. This trend implies a growing demand for contractors skilled in complex, custom builds and specialized installations, moving beyond simple cosmetic updates to address fundamental lifestyle shifts.

Specialized Services Lead the Way

Specialized service providers captured 81.8% of the U.S. residential remodeling market revenue in 2023, according to Grandviewresearch. This is historical data from 2023. This dominance confirms homeowners value expert craftsmanship and specific skill sets. Those willing to self-finance significant projects demand tailored solutions and quality execution. For contractors, this means a clear imperative: specialize, invest in advanced training, and market unique capabilities. Generalists may struggle to compete in a market increasingly defined by precision and bespoke solutions, where homeowners are paying cash for specific expertise.

The Future of Home Improvement Funding

Homeowners prioritize asset fortification over liquid savings, creating financial vulnerability.

• 84% of homeowners used personal savings to absorb rising renovation costs, including a 13% increase for bathrooms, according to Houzz.

This strategy secures property value, but it can deplete emergency funds, leaving individuals exposed to economic shocks. Aggressive use of personal savings is a double-edged sword: fortifying one asset while leaving others vulnerable.

Self-financing trends highlight a gap in traditional lending products.

• The preference for self-financing by 84% of homeowners signals a disconnect between homeowner needs and current lending options, according to Houzz.

This void suggests a market opportunity for financial innovations that better align with homeowner preferences for debt avoidance, lower interest rates, or a deep-seated distrust in current rates.

The remodeling market is shifting towards fewer, higher-value projects.

• Overall project volume dipped from 56% to 54% of homeowners, but median costs for kitchen renovations rose 9%, according to Houzz.

This shift demands higher-value services and specialized expertise from contractors. It caters to a segment of homeowners willing to invest more significantly, even if fewer are renovating overall.

The remodeling market will likely continue its growth, driven by a financially resilient homeowner base willing to self-fund high-value projects, potentially leaving those without significant liquid assets at a disadvantage if traditional lending options remain unaligned with consumer preferences.