By Lauren Rosales-Shepard, Content Writer
During the peak of the COVID pandemic, many of us were stuck at home. It’s no surprise that, given all this extra time in our houses, there was a resultant surge in home renovations and expansion. However, borrowing costs soon skyrocketed. This slowed home sales and made it prohibitively expensive to tap into home equity to fund larger projects with traditional loan products like a HELOC.
That’s about to change.
The Wall Street Journal is forecasting that remodeling was not merely a COVID phase, but is ramping again. According to a prediction made by Harvard’s Joint Center for Housing Studies and its Leading Indicator of Remodeling Activity, the annual spending will increase to $477 billion in the first nine months of 2025, nearing the record of $487 billion for all of 2023.
More evidence of the resurgence is a recent survey of 475 households, most of which claimed to be waiting for lower rates to use home-equity lines of credit to fund projects. The senior vice president of building products research at John Burns Research & Consulting estimates that this number is just the beginning; he suggests that there is about $30 billion in remodeling spending just waiting for the right moment.
That moment may be now. Those who bought homes with historically low mortgage rates during the pandemic aren’t likely to move–perhaps ever–which increases the likelihood that they will renovate or expand instead. Now that the Fed has recently lowered interest rates, households may be poised to tap into their equity to fund new projects.
One very popular new housing project is the construction of “Accessory Dwelling Units” (ADUs). Also commonly referred to as a “granny house” or “backyard cottage,” an ADU is an additional, self-contained living space attached or adjacent to the primary house on a single family residential lot. Traditionally, as the nickname “granny house” implies, these types of units were often utilized by family members in a multi-generational household. However, in California, recent legislation has both enabled and encouraged the construction of ADUs as rental properties–or even sellable condos. In 2023, Los Angeles County alone permitted more than 45,000 ADUs.
Why the rising popularity? On the one hand, maintaining an ADU as a rental or even an AirBnb means additional, and eventually passive, income. But there are more wide-ranging benefits as well. ADUs are inherently sustainable, as they are built on existing properties (particularly in urban areas) and therefore don’t contribute to sprawl. Plus, given their compact size, ADUs take fewer raw materials to build, conserving resources. These units are also seen as a way to mitigate the housing shortage. States like Massachusetts and Colorado have followed California’s example, paving the way for more homeowners to develop these small units on their land.
Though a pilot program in Long Beach is offering $250,000 in low-interest loans to build ADUs, most homeowners are turning to their built-up equity to provide the necessary funds for construction.
When it comes to accessing home equity, there is now an additional option. Unison recently launched the Equity Sharing Home Loan, a ten-year fixed, interest-only second mortgage designed specifically to offer homeowners flexibility in their finances via low monthly payments. Through partially-deferred interest and a shared appreciation component, the Equity Sharing Home Loan endeavors to provide below-market rates that enable homeowners to save each month.
When it comes to renovating or remodeling, the Equity Sharing Home Loan has a particular feature of interest. The Capital Improvement Adjustment is available three years into the loan term, and is intended to offer the homeowner, if they make improvements to the home that boost its value (beyond regular maintenance), the opportunity to apply to maintain all the benefits. In other words, the value added by these improvements would not be part of the future shared appreciation.
If you’re one of the many homeowners contemplating a renovation project, but hoping to keep your monthly payments low, learn more about Unison’s Equity Sharing Home Loan today and get a rate estimate with no obligation.
The content on this page provides general consumer information. It is not legal or financial advice. Unison has provided these links for your convenience, but does not endorse and is not responsible for the content, links, privacy policy, or security policy of the other websites.
During the peak of the COVID pandemic, many of us were stuck at home. It’s no surprise that, given all this extra time in our houses, there was a resultant surge in home renovations and expansion. However, borrowing costs soon skyrocketed. This slowed home sales and made it prohibitively expensive to tap into home equity to fund larger projects with traditional loan products like a HELOC.
That’s about to change.
The Wall Street Journal is forecasting that remodeling was not merely a COVID phase, but is ramping again. According to a prediction made by Harvard’s Joint Center for Housing Studies and its Leading Indicator of Remodeling Activity, the annual spending will increase to $477 billion in the first nine months of 2025, nearing the record of $487 billion for all of 2023.
More evidence of the resurgence is a recent survey of 475 households, most of which claimed to be waiting for lower rates to use home-equity lines of credit to fund projects. The senior vice president of building products research at John Burns Research & Consulting estimates that this number is just the beginning; he suggests that there is about $30 billion in remodeling spending just waiting for the right moment.
That moment may be now. Those who bought homes with historically low mortgage rates during the pandemic aren’t likely to move–perhaps ever–which increases the likelihood that they will renovate or expand instead. Now that the Fed has recently lowered interest rates, households may be poised to tap into their equity to fund new projects.
One very popular new housing project is the construction of “Accessory Dwelling Units” (ADUs). Also commonly referred to as a “granny house” or “backyard cottage,” an ADU is an additional, self-contained living space attached or adjacent to the primary house on a single family residential lot. Traditionally, as the nickname “granny house” implies, these types of units were often utilized by family members in a multi-generational household. However, in California, recent legislation has both enabled and encouraged the construction of ADUs as rental properties–or even sellable condos. In 2023, Los Angeles County alone permitted more than 45,000 ADUs.
Why the rising popularity? On the one hand, maintaining an ADU as a rental or even an AirBnb means additional, and eventually passive, income. But there are more wide-ranging benefits as well. ADUs are inherently sustainable, as they are built on existing properties (particularly in urban areas) and therefore don’t contribute to sprawl. Plus, given their compact size, ADUs take fewer raw materials to build, conserving resources. These units are also seen as a way to mitigate the housing shortage. States like Massachusetts and Colorado have followed California’s example, paving the way for more homeowners to develop these small units on their land.
Though a pilot program in Long Beach is offering $250,000 in low-interest loans to build ADUs, most homeowners are turning to their built-up equity to provide the necessary funds for construction.
A New Equity Financing Option: the Unison Equity Sharing Home Loan
When it comes to accessing home equity, there is now an additional option. Unison recently launched the Equity Sharing Home Loan, a ten-year fixed, interest-only second mortgage designed specifically to offer homeowners flexibility in their finances via low monthly payments. Through partially-deferred interest and a shared appreciation component, the Equity Sharing Home Loan endeavors to provide below-market rates that enable homeowners to save each month.
When it comes to renovating or remodeling, the Equity Sharing Home Loan has a particular feature of interest. The Capital Improvement Adjustment is available three years into the loan term, and is intended to offer the homeowner, if they make improvements to the home that boost its value (beyond regular maintenance), the opportunity to apply to maintain all the benefits. In other words, the value added by these improvements would not be part of the future shared appreciation.
If you’re one of the many homeowners contemplating a renovation project, but hoping to keep your monthly payments low, learn more about Unison’s Equity Sharing Home Loan today and get a rate estimate with no obligation.
The content on this page provides general consumer information. It is not legal or financial advice. Unison has provided these links for your convenience, but does not endorse and is not responsible for the content, links, privacy policy, or security policy of the other websites.
About the Author
Dr. Lauren Rosales-Shepard
Dr. Lauren Rosales-Shepard is Unison’s content writer. She has a PhD in English from the University of Iowa, and after several years of teaching rhetoric and composition as a college professor, she joined Unison in 2022 to bring her writing and research skills to the realm of fintech in real estate.
