Americans would rather renovate than save for a down payment: Zillow

The vast majority of Americans, especially those that could be downsizing into a smaller property, would rather renovate their current home than save for a down payment, a Zillow survey found.

Across all age groups, 76% of Americans would rather use a set amount of money to pay for renovations for their current home instead of saving it to put down on a new home, the Zillow Housing Aspirations Report found.

The results were starker when the demographic is limited to older Americans. Among those respondents aged 55 or older, 87% said they would prefer to renovate; among retirees, it rises to 91%.

Respondents aged 18 to 34 were the group that had the highest level saying they would save for down payment. But even with this group, 66% said they would rather renovate. For the group aged 35 to 54, 73% preferred to renovate.

Renters were also surveyed, and 67% of this group preferred to make changes to their rental rather than putting the money towards a down payment.

Previous Zillow surveys found 83% of homeowners love their current residence and that 63% of them don't plan to sell — not only because they love their home but they don't want the hassle of moving.

Then there is the inventory shortage — 43 consecutive months where on an annual basis the number of homes for sale declined although the gap has been narrowing — and rising interest rates, making a trifecta of reasons for consumers that would otherwise be potential buyers to stay where they are.

"Even in a seller's market, simultaneously buying and selling is an exercise in frustration. Add to that the emotional history between you and your home, and it's no wonder low inventory has been in a self-fulfilling cycle," Skylar Olsen, Zillow's director of economic research and outreach, said in a press release. "Homeowners may hesitate to sell because of limited options for them as buyers, but by holding on to their homes, they are themselves contributing to low inventory."