Orange County remodeling has always been a chameleon, adapting to changing trends and economic climates. But in recent years, the global stage has thrown some curveballs, demanding even more agility from remodelers and homeowners alike.
If you’re planning a remodeling project in 2023, then, what can you expect to see? That’s exactly what we’re going to delve into today, along with where we’ve come from and what you can do to make your own remodeling experience a successful one.
Orange County Remodeling Trends 2020 – 2023
Before we take a look at where Orange County remodeling is headed in 2024, let’s take a quick look at what happened in the last few years that brought us to where we are today.
First, no one will soon forget the COVID-19 pandemic that surprised us in 2020. As people were encouraged to stay home to slow the spread of the COVID-19 virus, the work-from-home trend boomed. This led to increased requests for home office remodeling projects in 2020 and 2021 as employees realized a designated work space was needed to make work-from-home easier and more efficient.
As families spent more time at home and less time traveling, there was also a boom in outdoor living projects – patios, pools, outdoor kitchens, etc. A comfortable outdoor living space enabled families to spread out when they were all at home. It also allowed for open-air entertainment when inviting guests over was no longer taboo but there was still concern about transmitting COVID-19.
There was also a massive surge in household formations; this was driven by mass relocations with the work-from-anywhere ability enabling fewer roommates and more independent living. There were 380,000 more apartments leased in 2021 than the previous 5-year average. The average number of people per apartment reduced from 1.8 to 1.6 YOY in 2022. This is the highest apartment occupancy in history – record-breaking economic changes. And as with any other economy, the demand enabled an increase in rent. The market is showing a 13% increase in monthly rental rates.
People often consider selling to get a bigger home versus remodeling – during the pandemic we saw a wild real estate market. Inventory was extremely low if not the lowest we have seen historically. In January 2021, there was a significant reduction in available homes for sale which led to an influx in remodeling. In addition to the inventory shortage, again with supply and demand, home prices soared. Home prices increased by 41% after the pandemic began – and what goes up does not always go down. Home prices are holding despite increasing interest rates.
There was also an influx in savings during this time as all extracurricular activities ceased; from vacations to everyday eating out disappeared, leaving Americans with more savings than typical. It is estimated to be trillions of dollars in reserve during this time, making home remodeling a very appetizing option to add more space.
Real estate investment also spiked during COVID bringing new investors into the market and those already in buying more. The investor real estate market share grew from 21% pre-pandemic to 27% post-pandemic; over 25% of the real estate market is investor owned. Investors have been buying up to 1/3 of the market in some cities. Phoenix is nearly 50% rental property. Washington DC has the least investor-owned property, coming in at 11% of all property being rentals.
Adding insult to injury, interest rate increases on top of a 40% increase in the average home price have resulted in a 31% rate-induced payment increase. Home owners are starting to consider how best to use their savings when needing more space and different spaces. Let’s see what 2023 has in store for the market.
The effects of the pandemic were soon seen in other ways – labor shortages and company shutdowns led to supply chain issues, difficulty procuring materials in a timely manner, and significant increases in building material costs. This means some remodeling projects were delayed. And, sometimes materials had to be substituted with what was available versus utilizing first-choice materials.
What to Expect When Remodeling in Orange County in 2024
With the pandemic finally in our rearview mirror, where is Orange County remodeling headed in 2024? Here’s what the current market looks like and what you can expect to see as the year progresses (barring any surprises, of course!):
- Slower (or no) growth in overall remodeling projects – According to data compiled by John Burns Real Estate Consulting, LLC, the overall volume of home renovation projects in California has stalled. While it rose significantly in the 2020-2023 time frame, it’s beginning to level out and even decrease in some areas.
- More ‘replacement’ type home renovations – The demand for smaller home remodeling projects like replacing doors, siding, or roofs has remained steady and is even increasing in some cases. Due to new regulatory demands, there are also new tax incentives for greening your home.
- Fewer ‘luxury’ or ‘nice-to-have’ remodeling projects – While 2020-2023 saw an increase in discretionary spending on things like patios, pools, and outdoor kitchens, homeowners are trending toward focusing on ‘must-have’ remodeling projects in 2024.
- Higher remodeling costs – While building supply costs have leveled out some, they’re still higher than pre-pandemic prices. Thanks to higher material costs as well as rising labor rates, remodeling in 2024 will cost more than it did prior to 2020.
- Under-supplied housing market – Between new households formed, 2nd home purchases, and tear downs, the market is under-served by 1.7 million homes leading to a housing shortage, which again will push homeowners to consider creative ways to make their home work. Whether an ADU for multi-generational living, rental income, or office space – it may be the wave of the future with fewer housing options available on the market. And as referenced with supply and demand, home prices will increase based on the shortage of supply.
Advice to Homeowners for Orange County Remodeling in 2023
So, what does this all mean for the average homeowner in Orange County, CA? First, it’s important to remember what forecasts are … an educated guess about what will happen in the future. While looking at future projections can certainly be helpful, it doesn’t take the place of following practical reasoning and sound advice.
If you’re planning an Orange County remodeling project in 2024 … or any year, for that matter … here are some solid pieces of remodeling advice to help you through the process:
1. Evaluate your wants vs. needs.
Our experience with remodeling in Orange County has taught us many things but one thing in particular stands out … the homeowners who are most satisfied with the end results of a remodeling project are the ones who took the time to plan. That includes making a detailed comparison between essential components of a remodel and those that are simply wants.
When you start planning your remodel, make sure that your ‘must-haves’ are included. Then, you can add in the ‘would-likes’ as your remodeling budget allows. Following this plan means you’ll be left with a finished project that meets your family’s needs but also includes some personal features that make the project feel uniquely yours.
2. Every home renovation needs a remodeling budget.
It will be very disappointing if you embark on a remodeling project only to find out halfway through that you don’t have the funds to finish what was started. Take our advice and create a realistic remodeling budget at the very beginning.
Start by deciding how much money you have available to spend. You can then work through the wants and needs you determined above and decide what fits and what doesn’t.
Just remember that even with the best planning, it’s not uncommon to encounter unexpected expenses during the remodeling process. Make sure your budget accounts for this by setting aside 10-20 percent for contingencies.
3. Work with a professional Orange County remodeling company.
With online resources such as Pinterest and YouTube and the popularity of DIY home remodeling TV shows, it’s no surprise that many homeowners think they can do their own kitchen or bathroom remodel. Want our advice? Don’t do it!
Unless you’re a master craftsman yourself, it’s not a good idea to tackle most home renovations on your own. Even if it looks like you’ll save money on the front end, you’ll probably end up paying more in the long run. That’s because home remodeling is rarely as easy as it looks on TV. Without the proper tools, expertise, and experience, you could make costly mistakes that make you spend more money, take more time, and leave you with unsatisfactory results.
Design-Build Remodeling in Orange County, CA
Sea Pointe Design & Remodel has been providing top quality Orange County remodeling services for almost 40 years. Our design and building professionals guide you through the remodeling process from start to finish, leaving you with a beautiful and functional space that’s uniquely yours.
To learn more about the work we do, check out our online portfolio of completed kitchen, bathroom, and whole home remodels. Or, register for one of our upcoming remodeling webinars to learn helpful remodeling tips from the pros.
Then, when you’re reading to start planning your own remodeling project, simply give us a call at (949) 861-3400 or fill out the form below to schedule your complimentary design consultation.