For years, buying a home in need of work was seen as a more affordable path to homeownership and building wealth. However, the trend of purchasing fixer-upper homes is declining due to rising costs and labor shortages. According to Zillow, fixer-uppers are selling at a 14% discount compared to similar move-in-ready homes, the steepest discount in years.
Rising Costs and Labor Shortages
Tariffs, inflation, and a shortage of construction workers have made home improvement projects significantly more expensive and time-consuming. Many Americans are finding that the math behind buying a fixer-upper no longer pencils out. High home prices and elevated mortgage rates have already stretched budgets thin, leaving little money for renovations.
Real estate agent Juli St. George in Atlanta has noticed a shift in her clients’ preferences. "The Chip and Joanna Gaines era has passed," she said, referring to the popular television personalities who rose to fame through the HGTV show "Fixer Upper." "Before, people were looking for a home to make their own and save up for renovations. It’s not happening anymore."
Homeowners’ Struggles
Molly and Matt Dodge, who bought their first home in Arlington, Vermont, this year, are facing significant renovation costs. Contractors quoted between $30,000 and $50,000 to replace their septic system, and thousands more to address other issues. The couple has already spent about $10,000 on do-it-yourself repairs.
Another couple, Luke VanFleet and his fiancée, bought their first home in Traverse City, Michigan, but were shocked by the prices quoted for renovations. Three contractors estimated $40,000 to replace the home’s rotting siding and aging windows, and another estimated $6,000 to install a basic heating and cooling unit.
The average US home is 42 years old, up from 31 years two decades ago, according to the US Census Bureau. This reflects a long-running slowdown in home construction driven by rising expenses from materials and labor, as well as changes in local zoning and permitting rules.
New Incentives for Homeowners
A bipartisan housing affordability law that took effect earlier this month aims to tackle the increased cost of addressing repairs by creating new incentives for homeowners. The law authorizes a pilot program offering grants and forgivable loans to address a range of repair needs and health hazards.
Original reporting: El Paso News (HLL/CB) — read the source article.
