High mortgage rates are turning today’s buyers away from fixer-uppers, which have become more costly as the rates for home loans and construction loans have both increased on top of high property prices, The Wall Street Journal reports. Homes in need of repair are spending more time on the market compared with newly renovated homes, and as prices continue to rise, that difference in list time is widening.
The market for homeowner improvement and repair projects in the U.S. is projected to reach $484 billion in 2023, up from $471 billion last year, but the majority of those remodeling are existing homeowners looking to upgrade without giving up their ultra-low mortgage interest rate rather than new buyers renovating a recently purchased home.
Anything that sits on the market for more than a month is usually either overpriced or in need of significant repairs or updates, said Taylor Marr, Redfin’s deputy chief economist. Homes stay on the market for a median of 27 days, up from 19 days a year ago, according to Redfin.
“Most home buyers right now simply don’t have enough money left over to invest in major repairs or remodeling,” said Marr.
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