Data on how higher housing prices are pushing more people to purchase fixer-uppers

As housing prices rise, one potential option for homebuyers is to purchase a home needing repairs or renovation. Here are some numbers on this option:

Photo by Laurie Shaw on

“When everyone else is looking for a move-in ready home, there’s less competition for the fixer-uppers,” said Daryl Fairweather, chief economist at Redfin Corp. “I would not advise it for the faint of heart, but there are a lot of people who are willing to take on that risk because there is such a high reward.”

In 2021, homes in need of renovation sold at a faster pace than the two prior years, according to data from Fixer-upper sales jumped 13.4% from 2020 to 2021, while the dollar volume of those deals surged 40.8% from 2019 to 2021, reflecting the high growth in sale prices across the broader market. Plus, listings described as “fixer-upper” or using other related terms by agents increased by 8% in December from the previous year…

In a survey by housing research firm Zonda, 33% of respondents said they would buy a fixer-upper for their first or next home but “only if I got a great deal.” Meanwhile, 27% said they would “if the repairs are minor.” Just 20% responded with a “no thanks.”…

On average, fixer-uppers cost 13% less than their move-in ready counterparts, or are about $40,000 less than the typical U.S. home value, according to Zillow. But if that home needs $80,000 to make it livable, that’s not such a great deal, Pendleton said. She recommends that those fixing up homes add an extra 20% onto their budget as a cushion for the unforeseen. 

As the article notes, not everyone has an appetite, resources, or the skills for renovation. But, if the housing options are limited, this appears to be an increasingly attractive option for some. The data cited above suggests a small bump in people selling and buying such homes.

This is also interesting to consider from the other side: the sellers. If someone had a home that needed significant repair, this might be the time to not do those repairs and still get a good price. All those homes needing “TLC” or sold “as-is” now might not linger on the market for months.

More broadly, this hints at how much housing in the United States is eligible for repairs and renovation. The postwar suburban boom started roughly 70 years ago now. Those homes have already likely experienced a lot of repair and change and will undergo more in the upcoming decades. The McMansions of the 1990s and early 2000s will be the fixer-uppers of the future. And since Americans tend to like DIY projects and homeownership, we could be in for more decades of renovations.

Trading Spaces avoided McMansions

Washington Post review of the new Trading Spaces emphasizes the smaller spaces the show worked with:

Though it was technically impossible to indict the cable channels — especially HGTV — for their role in the quick-mortgage fantasia, the connections were plain to see: the schedule was (and still is) littered with shows that spur house envy, encouraging viewers to live in a constant state of renovation, makeover and upgrade. Homeownership became the highest expression of citizenship, while decor became the chief signifier of class. “Trading Spaces,” which premiered in 2000, helped ignite that craze, making it safe to waste entire Saturday afternoons watching home-improvement shows. Yet it hardly deserves all (or any) of the blame.

The show returns Saturday (with a long reunion special preceding it), essentially unchanged and contagiously giddy, full of its usual surprises and reveals. Looking at the first of eight new episodes, one is reminded of “Trading Space’s” conceptual purity: It never goaded anyone into ditching their old house for an open-floor-plan, granite-countertop McMansion beyond their means. Its core principles were to work with what you have, on a restrained budget. It preached a DIY ethic, asking couples to swap houses and redo a room, aided (some would say strong-armed) by a crafty professional designer and carpenter.

A few quick thoughts:

  1. The scale of renovation on Trading Spaces is much more doable for the average American homeowner compared to the whole house makeovers on many other shows. How many people have the budget to do multiple rooms, particularly creating all new kitchens or master bathrooms? Or, who has the time to hand over their house for weeks as opposed to doing renovations over a weekend?
  2. The rooms on Trading Spaces tend to be much more varied than the typical home shows that often emphasize an expansive kitchen and open concept first floor. The HGTV shows encourage a homogenous style, moving from stainless steel appliances and granite countertops to shiplap, white cabinets, and open shelving.  American homes tend to be unique inside, particularly in certain rooms where people to have eclectic styles and uses.
  3. While the review above does not blame Trading Spaces for the larger shows to come, once you on television continue (1) glorifying the single-family home as the expression of individual tastes (a long-standing American tradition) plus (2) suggesting that people should be renovating their homes (part of the shift from living in homes to seeing homes as investments), is it a slippery slope to large-scale renovations in big houses?

On the whole, there is a lot that could be said from the move from Bob Villa to Trading Spaces to House Hunters and Property Brothers alongside shifts in American housing. Of course, it is hard to make causal arguments about how watching these shows directly changes behaviors.

Transforming McMansions might offend architects?

The creators of The Offset House discuss possible reactions to their plans to renovate McMansions:

It’s easy to imagine NIMBY night-terrors if a neighbor suggested building this, but architects might not appreciate you treating McMansions so reverently, either. Who did you want to offend more?

Neustein: We wanted to offend Australian architects’ sensibilities. We don’t want to offend any actual [inhabitants]. We’re trying to appreciate what’s great about suburban life, because someone needs to if many people live there. A lot of architects are out of touch with ordinary aspirations for living and want to impose things from the top down.

Has this idea of outdoor verandas in housing appeared in Australian architectural history before?

Neustein: It’s important to recognize that we’re not necessarily talking about bringing this type of suburban environment forward; we might be talking about bringing it backward.

It is suggested in the first question that any neutral or positive use of a McMansion might be abhorrent to architects. Is this really the case? McMansions are not typically paragons of architectural design: they can have poor proportions, present a mish-mash of styles, and are often mass produced. Additionally, their setting in the suburbs may represent to many all that is wrong with modern society. Yet, if bad products can be made better, why wouldn’t architects support this? Perhaps this first question is intentionally overstated to present two opposites. At the same time, it is rare to find prominent designers or architects who are willing to work with “ordinary aspirations for living.”

For Thanksgiving, carve up McMansions

The Financial Review serves up this headline: “Architects sharpen knives to carve up McMansions.”

He says there are different ways to redeem McMansions. One could be divided into two side-by-side dwellings or even three separate townhouses. Alternatively, the division could be horizontal, with a ground-floor apartment and separate first-floor one. Fences could be knocked down to create common garden areas between dwellings.

Neustein calculates that to turn a typical seven-bedroom, three-bathroom McMansion into a split-level two-unit dwelling would cost about $350,000, or a $770 per square metre.

The procedure would involve removing the brick veneer walls and plasterboard lining, weatherproofing the newly exposed timber frame, demolishing internal walls and putting in new external walls with double-glazed windows and doors, rerouting plumbing and electricity, waterproofing decking for the new verandah space and installing a rainwater tank and sprinklers to fire-proof the timber structure.

It’s a cheaper outlay than buying a new apartment, the median price of which in Sydney was $675,000 last month, would let the existing owner stay in their home and area, and would create an asset they could rent.

This article provides a lot more details about these plans that were featured at the Chicago Architecture Biennial. Two quick thoughts:

  1. If apartments really are so expensive in the Sydney area, it seems like there is a lot of financial incentive to try something like this. Imagine a local business or institutional investor buying up some of these large McMansions and converting them into rentals with the aim of long-term profits (as opposed to the big profits made by building and selling such a big home in the first place).
  2. As the article goes on to note, it is hard to know whether people would want to rent so far out from job centers. Yet, I imagine another issue: what would the neighbors say? These large homes are probably built in neighborhoods with a number of similar homes. Renovations like these would be frowned upon as it would introduce renters (who are different kinds of people than those who own expensive large homes) and change the character of a quiet neighborhood. In the United States, such changes would have to go through municipal approval and to put it mildly, I think the neighbors would be opposed.

Can an old church be converted into a boring McMansion?

Curbed presents an example of an old church building with a so-called boring McMansion interior:

In a harrowing example of conversions gone wrong—or if not wrong at least boring—this stunning landmark church in Cleveland Heights, Ohio seems to have fallen victim to one very unholy makeover. Currently on the market for $439K, the three-bedroom, 2,635-square-foot home looks the same as always from the outside, but offers the dullest, boxiest new interiors imaginable—with a veritable sea of beige walls and oatmeal colored carpeting. Even the massive windows—the crowning glory of most church-to-home conversions—seem to be sporting some sort of weird framing over the lovely original glass. Sure, some of the blame can probably be shifted to the staging, but there’s just no getting around the general awkwardness of the layout.

Here is the problem with claiming that this is a McMansion: typically, the term McMansion is applied to exteriors. In that sense, this home has done everything right. They took an old church, presumably one that was no longer being used as a home for a religious congregation, kept the historic exterior, and only renovated the interior. The home is not ridiculously large; the listing says it is just over 2,600 square feet and the size is masked a bit by the building’s exterior. The church is in an older neighborhood so this renovation avoided either a teardown situation or building another McMansion on the exurban fringe. The home can’t immediately impress the average passer-by, supposedly a key feature for status-hungry McMansion owners, as they would probably think it is a church rather than a home.

Is an interior enough to make this renovated church a McMansion? I think one could complain about the interior design, particularly if it misses an opportunity to take advantage of a unique building, without placing it the category of McMansion which carries with it all sorts of other connotations.

If you don’t like McMansions, be prepared to renovate and live in older homes

Older homes are an alternative to McMansions but someone has to renovate them and then choose in them:

Enter Barbara Jones. The Needham contractor launched Little Pink Houses a couple years ago to provide an alternative to homeowners who want to sell but aren’t keen to see all their memories bulldozed away to make way for some cold, grotesquely large, and soulless box.

Jones’s aim is to hit the $600,000 to $800,000 end of the market in Needham, where listings are comparatively scarce, while saving some of the town’s graceful older homes from the wrecking ball…

My goal on my houses is to keep the original footprint but to update the entire inside to provide a “brand new” old house for the buyer. Staying within the existing footprint enables the end price to be well below the $1million+ price tag that is becoming the norm here in Needham.

I want to preserve the older homes and keep the charming feel of our 300-year-old town while providing homes in the price range that is becoming increasingly rare: $600k – $800.

The number of people who have expressed their gratitude to me around the preserving of my home has been overwhelming. I credit the woman we purchased my home from. She had multiple offers from builders who wanted to buy the 4 acres my home sits on and turn it into a development. We are thankful that she “waited” for us to come along.

The steady march of McMansions requires that good citizens do nothing – or something like that. Two things strike me by this particular approach:

1. It is still not cheap to preserve these older homes. The average homeowner in Needham might be able to make more money by selling the home and lot to someone who desires a teardown and can pay more. In many places, it might be difficult for owners to take less simply to preserve the houses.

2. It sounds like the older homes are completely renovated inside. So while the exterior appears old, the new buyer gets all the modern conveniences they might expect in a new home. It seems a bit strange that older homes might only be attractive to buyers if they basically look like new homes on the inside. Yes, these older homes may not have been turned into McMansions but this might have been the goal with the interiors.

All together, it can be quite a bit of work to preserve older homes and it requires willing sellers, buyers, and neighbors. It would be interesting to then find out whether it is “easier” to have teardowns and McMansions rather than organize to keep older homes that enough buyers still want.