High mortgage rates keep Milwaukee homeowners renovating, not moving

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High mortgage rates are keeping Milwaukee-area residents in their homes longer – and eyeing increasingly ambitious home and backyard renovations.

That’s what remodelers said during the National Association of the Remodeling Industry’s annual Spring Home Improvement Show, held Feb. 13-15 at the Wisconsin State Fair Park Exposition Center. The show featured around 150 local home improvement companies specializing in remodeling, exteriors, windows and doors, electrical and backyards.

NARI Milwaukee represents more than 500 area remodeling and home improvement professionals.

Here’s a look at the trends Milwaukee-area remodelers are watching:

Residents are staying in their current homes – and spending a lot on them

Business is booming for home remodelers like Paradise Builders in Waukesha – homeowners are increasingly choosing to invest in major home projects rather than buying a new home altogether.

Founded in 1999, Paradise Builders offers projects from small bathroom and kitchen updates to major home renovations. Kevin Anundson, Paradise Builders sales design consultant, said he’s never had so many requests for additions before.

“It’s been incredible,” Anundson said.

Anundson attributed the boom to higher mortgage interest rates. During the COVID-19 pandemic, mortgage rates dropped to historic lows of 2-3%. But they rose to an average of more than 7.5% in 2023 as the Federal Reserve sought to tamp down on inflation.

The U.S. average 30-year mortgage rate has since fallen to just over 6%, but many homeowners still sit on more favorable mortgages they’d rather not give up.

“People are realizing that it’s a better deal to invest a larger sum in your home,” Anundson said. “Yeah, you’re still going to pay six, seven, eight percent for that addition, but you get to keep the majority of your lower-cost mortgage rate.”

Elm Grove resident Mike Danielson, 50, is one of them. Last year, he and his wife poured almost $200,000 into a complete kitchen overhaul. They had owned the home for eight years before exploring the remodel.

“The house that we’re in is the house we want to stay in for a long time, and so we said, ‘let’s spare no expense, let’s do exactly what we want,'” Danielson said.

It’s also a sharp contrast to 20 years ago, when large home renovation projects dried up with the U.S. housing market during the Great Recession, Anundson said.

“Large projects went away completely – even expensive kitchens went away completely. It was primarily bathrooms and smaller projects,” Anundson said. “They’ve been back steady since, but once the interest rates went up, the larger projects have taken off.”

Hot tubs, saunas are in as homeowners chase wellness trends

Preparing for spring, vendors rolled out elaborate patio, deck and landscaping displays. This year, that also includes outdoor home saunas.

Excel Custom Contractors specializes in outdoor projects like decks, garages and siding. Those comprise the majority of Excel’s business, but vice president of sales and design Elias McDonald says they’re seeing rising demand for hot tubs and saunas.

What’s driving this? McDonald and his father, Excel founder Robert McDonald, said the homeowners they work with want to maximize wellness in their own homes.

“People are thinking about and visualizing something different in their backyard versus just, ‘hey, let’s create a space to entertain on,'” Elias McDonald said.

Sauna culture is experiencing a boom across the U.S., but it’s always had a strong presence among Nordic immigrant communities in the Upper Midwest. In Wisconsin, communal saunas have become a way for people to connect. Some say they can provide health benefits.

The wellness trend was echoed during the Metro Builders Association’s Home Building & Remodeling Show from Jan. 9-11. Contractors said new homeowners increasingly looked for healthier air and water filtration systems after the COVID-19 pandemic.

“As the 30-somethings get into homeownership, they are much more driven on, ‘I want a healthier product for me and for my family,'” John Atlee, president of Waukesha-based water softener Water Doctors, previously told the Journal Sentinel.

Francesca Pica can be reached at fpica@usatodayco.com.

This article originally appeared on Milwaukee Journal Sentinel: Milwaukee home renovations boom amid high mortgage rates