One in three homeowners paid for a home renovation project with a credit card in 2017, a sign of increasing reliance on that form of payment in the home improvement industry, according to a study by Houzz and Synchrony.
One in three homeowners paid for a home renovation project with a credit card in 2017, a sign of increasing reliance on that form of payment in the home improvement industry, according to a study by Houzz and Synchrony.
The amount of home improvement product and service purchases made via credit card grew to $141 billion worth in 2017, a surge of 69 percent compared with 2011’s $84 billion. Eighty percent of the credit card purchases ($112.7 billion) were made to retailers, with 20 percent ($28.6 billion) made to contractors.
“Aging housing stock, low inventory of homes for sale, and major demographic shifts are driving up demand for home improvements, so it is natural for consumers to look for advantageous financing methods in order to smooth out renovation spend over time,” stated Nino Sitchinava, principal economist at Houzz. “Based on our study, credit cards appear to be a competitive financing method for a large share of renovating homeowners.”
Homeowners who used a credit card spent a median of $10,000 on renovations, with between $1,500 and $4,800 of the project charged to the card, according to the study. For remodeling projects over $50,000, 28 percent of homeowners reported using a credit card to pay for at least part of the project.
The percentage of the renovation project charged to the credit card was found to decrease the higher the cost of the project became, likely due to credit limits; an average of up to 50 percent of a project under $5,000 was paid for with a credit card, compared with 24 percent of a project over $50,000 paid for with a card. According the 2018 WFB Contractor Survey, 43 percent of wood flooring contractors said their average project size was under $5,000, with 38 percent reporting an average size of $5,000–$10,000.
Millennials (ages 25—34) were the most likely to use a credit card to pay for a renovation (41 percent), with Gen-Xers and Baby Boomers following at 34 and 30 percent, respectively. Millennials make up 8 percent of current homeowners.
More than half (54 percent) of renovating homeowners relied solely on cash to pay for a remodeling project in 2017.