When the pandemic brought on record-low mortgage rates, many Americans bought new homes or refinanced.
Fast-forward about three years to now when rates have nearly doubled, though, and a lot of those people are realizing a claustrophobic truth: That great deal has now shackled them to a property they might have outgrown.
But if you're in that situation, you're not without options.
Many homeowners are now reinventing their houses rather than trading up to a different house and a much higher rate.
"With low inventory levels in the housing market, many Twin Cities homeowners are turning to home improvement projects to better their living spaces," said Bjorn Freudenthal, vice president of business development for Twin Cities-based remodeler New Spaces.
Here are some of the most popular home improvement projects for staying-put homeowners this year, how to start a project and tips on how to pay for it:
Revamp your space
If you don't like your location, there's not much you can do. But if you don't like your house, you have lots of options, including transforming unfinished space into usable rooms. Many homeowners simply have space that no longer suits their needs.
"We are seeing homeowners update their current home to make the space more functional for the long term," said Marine Sargsyan, staff economist at the popular home renovation site Houzz.
Houzz, which enables users to post pictures of their house projects and products, is like a dating website for people on the hunt for a space that will fulfill all their needs. Every summer, the website does an analysis of the searches conducted on the site. It's an invaluable peek at the latest remodeling and home improvement trends.
The most popular searches this year show an undeniable interest in projects aimed at expanding or reinventing a room. From how to add space to a rooftop — or basement — the latest Emerging Trends Report shows homeowners are looking for ways to create more living spaces, divide existing spaces and improve key functions in the kitchen and bathroom.
Trends from this year's Houzz & Home Study show homeowners plan to stay in their home for more than a decade as they look for ways to improve existing spaces to better fit current and future lifestyles.
It's not just couples and young families. Baby boomers, in particular, are looking to age in place. That's why, Sargsyan said, so many people are embracing universal design, the practice of making a home accessible to people of all abilities.
Searches for "aging-in-place bathrooms" and "handicap-accessible bathrooms" each more than doubled compared to the same period in 2022. That included adding features like "handheld shower head," "ADA compliant bathroom vanities" and "curb-less showers."
"This supports our findings that homeowners are looking to stay in their homes into retirement years and are preparing their homes to anticipate lifestyle changes," she said.
Where to start
Begin by creating a wish list, an inspiration book or a random collection of pictures and drawings of spaces and design ideas that appeal to you. It's also a good idea to do as many home tours as possible, including open houses and home tours like the Fall Parade of Homes, which runs through Oct. 1.
Also peruse as many house listings as you can on listing sites such as zillow.com and realtor.com. There are also dedicated home design sites such as Houzz, the Spruce and Apartment Therapy. Some, including Houzz, include recommendations on how to hire local professionals.
Before beginning any project, it's important to outline the scope of the project you're looking to pursue and your budget.
When you're ready to start, you can hire an architect to design the project and then hire a subcontractor. Design-build firms are one-stop shops with designers on staff and construction crews that do the work. No matter whom you hire, make sure that person is licensed, bonded and has the proper insurance.
If you're a do-it-yourselfer, remember you're responsible for obtaining the proper municipal permits.
Is it worth it?
Not all projects will have the same impact on the value of your home, so the big question for many homeowners is whether investing in a home improvement project will be a waste of money or a good investment when it comes time to sell. No guarantees, of course, but there are lots of calculators that provide ballpark estimates on which projects offer the most return on investment.
Remodeling Magazine has one of the most popular. It includes an annual cost vs. value analysis for a variety of popular projects for specific metros including the Twin Cities, though it requires registration to access.
There are also websites like Realm, which help you plan and prioritize your projects, find quotes, learn about financing and connect with professionals.
How to pay
For people locked into a record low rate who don't want to sell and trade up to a higher mortgage rate, there is an upside to having bought in this market: You likely have significant equity that you can tap into to finance your improvements.
Freudenthal, the remodeler, notes home prices have increased 25.5% since May 2020, making it likely most homeowners will have the funds to remodel rather than move.
There are lots of options for using that equity, including traditional renovation financing, Home Equity Line of Credit (HELOC) and construction loans. If the only thing you want to avoid is moving, refinancing is also an option.
"Each of these choices provides unique advantages and flexibility, catering to the specific needs and financial circumstances of homeowners in the Twin Cities," Freudenthal said.
The right time
The prospect of planning a project can be daunting. Hiring someone to do it has been another significant challenge in the past couple of years. That's changing, along with the high — and fluctuating — cost and availability of lumber, concrete and other key construction materials.
John Weber, sales director for Castle Building & Remodeling, said building products inflation is cooling off, and the supply chain is improving, positive news for homeowners planning remodeling projects.
"Price fluctuation from a year ago has stopped," he said. "Procurement issues seem to be a thing of the past. It truly is a great time to remodel."
He also said homeowners are tackling smaller projects than in the past, freeing up remodelers to take on new jobs.
"People are absolutely still excited about improving their homes. ... "With the change of the economy, massive home add-ons, or second-story additions have decreased, and these are still the projects people are talking to us about," he said.
Top searches this spring on Houzz
Golf simulator: up 1,905%
Family rooms: up 791%
Rec rooms: up 524%
Rooftop terraces: up 1,555%
Rooftop deck: up 90%
Rooftop patios: up 40%.
Aging-in-place bathrooms: up 141%
Handicap-accessible bathrooms: up 137%
Handheld shower head: up 68%
Walk-in pantries: 2,636%
Large kitchen island with seating: 187%
Open-concept kitchen to family room: up 76%
Living room divider: up 446%
Shoji screen: up 60%
Partition wall: up 41%