Fixer-uppers are out as buyers pay up for 'move-in ready'

Changing consumer trends now show home buyers are increasingly inclined to pay a premium for a freshly remodeled house rather than take their chances on a do-it-yourself project. 

Buyers are willing to spend 3.7% more on a remodel compared to similar property types, a new Zillow analysis on home listing data found. The number amounts to an additional $13,194 on a typical U.S. home. 

The latest pricing data points to rapidly growing preference for already remodeled homes over the past 12 months. In the same analysis one year ago, remodels commanded a hike of only 0.8%. 

At the same time, properties that need some renovation put into them may have seen peak interest pass, at least in the current sales environment. Once made popular by reality TV shows like "Fixer Upper" and "Extreme Makeover," DIY remodels now go for 7.3% less than comparable homes, representing a drop of $28,000 on a typical unit. The discount is at its largest in three years, Zillow said.

The economics of remodeling a new home purchase today is behind some of the waning popularity of fixer-uppers, as interest rates and inflation both remain at elevated levels when compared to recent historical norms

"A remodeled home may come with a higher price tag, but a buyer would get to spread that additional cost over the course of a 30-year mortgage versus paying cash upfront to make similar upgrades themselves," said Amanda Pendleton, Zillow's home trends expert, in a press release.

"Fixer-uppers can be appealing to a first-time buyer trying to get their foot in the door of homeownership because they offer a lower initial price of entry. However, buyers who are already stretching their budget to afford a home in today's market may not be willing or able to spend more on renovations or repairs," she added. 

Instead, the buyer of homes needing work are now more likely to have financial means to customize a home according to their exact needs and wishes, Zillow noted. 

The popularity of renovation projects also surged over the past decade as home prices rapidly accelerated, but slowing appreciation means a DIY project offers less financial benefit for buyers today. As price growth surged to record highs above 20% early this decade, new homeowners were still likely to see large gains in equity even in the event of cost overruns. 

Last year, though, home appreciation grew by only 2.6% last year and is expected to increase 2.9% in 2025, according to sales data from Zillow's platform. 

Along with price differentials, interest in remodeled homes is also appearing in consumers' online search data. The real estate brokerage's platform found users saving remodeled home listings 26% more often on a daily basis compared to units without the description included. Those listings were also shared 30% more frequently to a buyer's shopping partner. 

Today, 28% of sellers are calling their properties "renovated," Zillow also found. Along with the anticipated growth in their homes' future values, opportunities for remote work led more homeowners to make upgrades to their properties over the past five years.