Remodeling Spending Surges in Michigan and Continues To Outpace Construction Nationwide

Remodeling continues to be a viable alternative to buying a new property for homeowners across the country, and Michigan is seeing more growth in the sector than any other state.

The latest State Projections of Remodeling report from the National Association of Home Builders tracks where and how homeowners spend remodeling dollars each quarter.

Not surprisingly, some of the biggest states in the country owned the largest piece of the remodeling pie. Texas, Florida, and California spent the most on remodeling in the first quarter.

Californians spent $22.2 billion, while Texans spent $20.2 billion, and Floridians spent $15.4 billion. Those three states accounted for more than 20% of total remodeling spending in the first quarter.

But Michigan led the states in remodeling growth, with spend there rising 10.1% annually to $637.6 million in the first quarter of this year.

Other states that saw a big uptick in remodeling spend were Virginia, up $421.9 million (+6.2%); North Carolina, up $323.6 million (+4%); Alabama, up $311.9 million (+8.2%); and Washington, up $269.1 million (+3.5%).

And while remodeling has seen an uptick, the NAHB reports that residential construction spending has continued to slip. According to U.S. Census Bureau data, the total number of housing units under construction in July was down 6% year over year.

John Salvatore Gelfusa is a Michigan-licensed builder and the president of the remodeling firm HomeWorks CGO. He's also an NAHB Certified Graduate Remodeler and the author of "The Smart Way To Remodel."

He says remodeling is booming in Michigan and his business is up 30% compared to last year.

"We're hearing from many homeowners who feel financially trapped in their current homes," says Gelfusa. "Selling would mean paying a higher price for their next house while also taking on a much higher interest rate. That double hit to the budget is convincing many homeowners to stay and improve the home they already have."

Gelfusa says that not only is the overall volume of his business increasing, but the projects themselves are larger and more involved.

"Many of our clients are choosing to remodel all of their bathrooms at once or combine a kitchen renovation with new flooring throughout the entire home. Instead of completing one small project, homeowners are investing for the long term," he says.

While the median listing price in Michigan has remained relatively steady at $310,000 over the past year, many homeowners are feeling the sting of high interest rates, which are currently hovering around 6.7%.

Additionally, home equity has climbed an astounding 142% since 2020, so it's no wonder so many homeowners are staying put and remodeling instead, says Gelfusa.

"It seems to me our clients aren't planning their next move. They're remodeling so they don't have to make one."