Late last year, Fannie Mae leveraged their National Housing Survey to ask homeowners about their interest in “green” home improvements, as well as the financial costs associated with making home repairs. With environmental concerns and energy efficiency increasingly top of mind for many, Market Research Senior Associate, National Housing Survey, wanted to better understand consumers’ interest in installing solar panels or making other energy-efficiency improvements, particularly if the costs of doing so were included in their mortgage balance.
The survey identified a significantly higher level of interest among younger homeowners in green home improvements, with their interest particularly pronounced for projects such as solar panel installation and energy-efficiency improvements. It was also found that 28% of homeowners are “somewhat” or “very” concerned about unexpected home repair costs. Notably, one-third of homeowners indicated that the costs required to make home repairs were higher than expected, and 28% expressed concern that unexpected repair costs could make it difficult to pay their mortgage or other monthly bills.
Examining Homeowner Interest in “Green” Home Improvements
Overall, approximately half of homeowners aged 18-34 would be interested in making energy-efficiency improvements (51%) or installing solar panels (48%), if the costs for these upgrades could be included in their mortgage. Both of these figures were far higher than the average level of interest across the general population of homeowners (34% and 32%, respectively).
Additionally, 26% of homeowners aged 18-34 expressed interest in an overall home energy assessment costing a few hundred dollars. This was, again, much higher than the interest among all homeowners (17%).
Exploring the Impact and Types of Home Repair and Improvement Costs
As discussed in a recent Fannie Mae Perspectives blog, the combined cost of home repairs and improvements can make up nearly 20% of the total cost of homeownership. It’s also clear from these survey results that this is an unexpected burden for a meaningful portion of homeowners.
Large, unexpected home repair costs can adversely affect housing stability, as some homeowners, especially those of more modest means, may struggle to keep up with both their mortgage payments and the often-costly repairs necessary to maintain their homes. Our survey results revealed that 38% of lower-income homeowners (i.e., those earning less than 80% of area median income (AMI)) believe their home repair costs were higher than expected, compared to 30% of higher-income consumers (i.e., those earning more than 120% AMI).
The results also plainly showed that higher unexpected repair costs are likely to have a disproportionate effect on lower-income consumers: While 28% of homeowners overall said unexpected repair costs would make them concerned about their ability to pay their mortgage or other monthly bills, that number rose to 40% among lower-income consumers — compared to only 21% for higher-income consumers.
Among the 28% of homeowners who expressed concern about unexpected repair costs potentially impeding their ability to pay their bills, 60% said the older condition of their home necessitates repairs, while 20% said they need repairs due to remodeling. Twenty-five percent plan to conduct large or very large repairs (e.g., room additions, exterior and/or interior structures, HVAC units), and they were significantly more likely to label these repairs as cost-burdensome. Hispanic and Black homeowners, as well as lower- to moderate-income consumers (i.e., homeowners earning less than 120% AMI), were more likely to be very or somewhat concerned about unexpected repair costs compared to other groups.
We also asked about the costliness of certain types of home repairs. The most financially burdensome repairs cited by homeowners were those to the exterior structure of the home (e.g., the roof, siding, windows), followed by those to HVAC units, and repairs to appliances or other major equipment (e..g, refrigerator, water heater).
Home repairs and improvements, including green improvements, may help protect homeowners from climate- and energy cost-related financial shocks. It’s possible that, for many homeowners, recent home price gains have elevated home equity levels such that some households may now be able to finance these improvements. However, lower-income consumers are less likely to have invested in home repairs and preventative maintenance1 , potentially setting them up for unexpected costs in the future that our findings indicate may be difficult to manage. It’s critical that all homeowners are able to budget for home repairs and maintenance to help avoid significant –and unexpected– financial hardship.
To read the full report, with more commentary from Mark Tillman, click here.
- 'Home Improvement' Star Patricia Richardson Just Shared a Super Rare Photo Featuring Tim Allen
- 20 Home Renovations That Will Hurt Your Home’s Value
- Home Improvement Retailers Are Still Winning With Analysts, to an Extent
- Surprising Home Improvements That Are Legal To Do Yourself
- Homeowners delay big purchases, improvement projects due to inflation