Sales of fixer-uppers rose 13.4% last year from 2020, and the dollar value of deals surged 41% from 2019 to 2021.
Home prices are soaring, making it challenging for many buyers to find an affordable home. Many are adapting to this situation by buying homes in need of repair, fixer-uppers.
Last year, sales of homes needing renovation climbed 13.4% from 2020, while the dollar value of those transactions jumped 40.8% from 2019 to 2021, according to Realtor.com, as cited by Bloomberg.
“When everyone else is looking for a move-in ready home, there’s less competition for the fixer-uppers,” Daryl Fairweather, chief economist at Redfin Corp., told Bloomberg. “I would not advise it for the faint of heart, but there are a lot of people who are willing to take on that risk because there is such a high reward.”
To be sure, renovating isn’t easy. Prices for construction materials are soaring, and there are supply shortages for some of them. Hiring workers could cost you a pretty penny, if they’re available at all.
“A buyer needs to be aware of the cost, time, and emotions involved with these kinds of projects,” Kimberly Jay, a broker at Compass in New York City, told Real Simple.
“Purchasing a home should be a positive and exciting time, not something that’s going to drain you both emotionally and financially,” she says.
And if you want to sell your house someday, mediocre renovations might hold down its value. Potential buyers might not be too interested in a home with a kitchen or bathrooms that weren’t refurbished to their liking.
In any case, with the lack of new homes being built, some buyers may have no choice but to chase after fixer-uppers.
So it’s no wonder that last year, the typical home purchased was 28 years old, up from 18 years old a decade earlier, according to Jessica Lautz, vice president of demographics and behavioral Insights at the National Association of Realtors.
“Young buyers are more likely to feel the financial pressure of rising home prices and the lack of affordable inventory and are more willing to buy a fixer-upper,” she said.
And given the state of the housing market, “remodeling and repairing items may be a small investment after a buyer finds the home they desire with tight housing inventory and steep competition,” Lautz said.
Of course, buying a fixer upper doesn’t work for everyone. A study by housing information service Real Estate Witch found that millennials are more likely to purchase one than baby boomers at 82% to 62%, but 25% of millennials who do so regret it.
In May, TheStreet.com listed the best and worst cities in which to buy a fixer-upper. The best were Omaha and Allentown, Penn. The worst were Boston and Mesa, Ariz.
