Once you’ve signed the last paper at closing, you are probably breathing a sigh of relief, knowing that your money troubles are behind you. No more scrimping and saving for a down payment, no more fees, no more inspections. Well, think again. According to Market Watch, homeowner spending spikes in the first month after purchase as owners go about feathering their nest, so to speak, and turning their new house into a home.
Market Watch quotes the National Bureau of Economic Research, a Washington, D.C.-based research group, as saying that the average family spends $5,000 after moving into a new home. As per research by economists Efraim Benmelech, Adam Guren and Brian Melzer, buying a home generally triggered money spent on home renovations or on durable home goods such as new appliances. Interestingly enough, says study co-author Ephraim Benmelech, director of the Guthrie Center for Real Estate Research at Northwestern University’s Kellogg School of Management, this spending is triggered even by families who move into brand-new construction, proving that new homeowners truly want their homes to feel like their own.
The study took place between 2001 and 2013. A dip in spending was seen during the Great Recession, which was just one more factor that contributed to the falling market during the housing crisis. Permits for nine million homes were studied.
“People may move into a house with all new appliances but may not like how they fit with the décor, so they’ll replace them,” Benmelech told Market Watch. “Factor in the fact you might be moving to a new house, but there’s a good chance you may not like what’s in the house and you may end up changing it.”
Younger homeowners and those with median incomes under $57,000 for a family of 3 tended to spend more on home improvements after buying a home, probably because they were more likely to have purchased a home that was a “fixer upper” or needed work. On the other hand, the more bedrooms a home had, the more that homeowners spent on renovations and durable home goods.
Home buyers started to spend more money a full three months before the house’s sale went through, and the trend continued for a year afterward. Spending hit its peak at one month after closing. The amount was slightly less for second homes and investment properties; here the average homeowner spent only $3,700.
