Homeowners are underestimating the cost of expensive remodeling projects, often by thousands of dollars. For example, homeowners’ estimate for the price of a kitchen remodel is off by more than $9,500, a difference of 48%, according to a new study from Discover Personal Loans based on a survey of 969 consumers. The kitchen renovation, one of several common remodeling jobs that researchers evaluated, was the most underestimated home project.
“People often incorrectly estimate some of life’s costs,” the researchers note. “From kitchen remodels to health care expenses or the cost of starting a business, many have trouble accurately estimating the cost of these expenses and many others that may come up.”
Many homeowners struggle to estimate how much money they will need for home improvement projects, the survey finds. On average, homeowners underestimated the surveyed renovation projects by an average of about 46%, making it difficult for owners to accurately budget. Researchers point to this as a reason why they’re not saving enough. Only 37% of homeowners surveyed set aside a part of their monthly budget to save for repairs and home improvements.
Consumers also underestimate smaller projects like cabinet re-facing, as many thought the price was 74% less than the actual cost, the survey found.
“One common budgeting pitfall is forgetting to account for the cost of the labor,” the survey notes. “Labor can account for over one-third of your total cost.” Further, a labor shortage is driving up costs even as the price of materials is rising.