How ‘Fixer Upper’ Changed the Way People Buy Homes

When Sarah Richardson and her husband were house hunting near Green Bay, Wisconsin, they came across a 5,300-square-foot riverfront home. The behemoth property hadn’t seen an update since it was first built in 1959. It had a mishmash of styles and plenty of quirks—like a pulley-operated staircase; and a shallow, miniature bathtub surrounded by buttercream yellow tile. A tree once even grew in the living room.

The fixer-upper had sat stagnant on the market for a few years. But, the property had good bones. Richardson could look beyond the dated slabs of tongue-and-groove wood and see her own version of shiplap. She was envisioning a tailor-made home imbued with farmhouse charm, complete with soft blues, neutrals, and subway tiles.

Richardson could practically hear Chip and Joanna Gaines’ from “Fixer Upper” saying, “Buy the worst house in the best neighborhood,” as she toured her future home.

So Richardson and her husband bought the Green Bay-area property. It cost less than the sale price of their former home. With the money leftover, they decided to renovate.

Call it the HGTV effect: Shows like “Fixer Upper,” which aired for five seasons on the network, have undoubtedly rebranded the American dream of homeownership. A decade ago, real estate agents struggled to get clients like Richardson to look beyond burnt orange shag carpet or avocado green tiles. Now, agents say buyers excitedly search for homes they can renovate. In fact, according to Realtor.com’s latest spring homebuyer survey, a whopping 60 percent of buyers now consider homes that need renovating.

Sure, dramatic before-and-after photos and footage can be fun to watch. But, why is renovating so popular IRL? In order to understand how “Fixer Upper” changed the real estate market, it’s important to look at where it fits into the housing crisis story.

A recent Fortune story sums it up nicely: In the early 2000s, real estate companies were building new entry-level homes like crazy. But then came the housing crisis. Suddenly homes were abundant and super cheap. But, given what had just happened, the banks were wary of lending to Older Millennials with their college debt, bad credit, and precarious employment. So the affluent took advantage of these investment opportunities—with cash— set them up as investment properties, and became landlords to these Millennials. As the market rebounded, they jacked up the rent, making it harder for their tenants to save for homes of their own.

By the time “Fixer Upper” came onto the scene in 2013, the job market was rebounding and many thirty-somethings had diligently saved a modest down payment and worked on their credit for a decade or so while renting.

Now, this group as first-time homebuyers would normally have been turned off by ugly paint color or worn carpets and flocked to turn-key houses, says Beatrice de Jong, consumer trends expert at Opendoor, a real estate startup that allows people to buy and sell homes online. But there were almost none of these homes on the market for these older Millennial homebuyers. After the last entry-level building boom, investors decided to focus on building big, new homes. Small homes for average income buyers was just too precarious, given what had just happened. And since land was becoming more expensive, builders could turn a bigger profit by selling huge houses to those who could afford them.

So those turn-key, entry-level homes that were available became more coveted, and therefore more expensive. For those on a limited budget, homes that needed renovations were the only options.

While maybe a decade or so ago these limited-budget homebuyers might have just continued renting and saving, there was a new factor to shake things up: The democratization of technology.

Josh Rubin, a New York City broker with Douglas Elliman, says that because one could easily cultivate DIY, contracting, or design skills online, that worst house in the best neighborhood seemed like the only budget-friendly way to become a homeowner. In the past, seasoned homebuyers like Richardson were usually the ones up to the renovation challenge, but now, armed with sites like YouTube, Instagram, Pinterest, (and, hello, Apartment Therapy!), first-time homebuyers were ready to take a whack at it.

Having lived through the Great Recession, those Millennial homebuyers were as budget-conscious as ever, too. And Chip and Jo directly assuaged their audience’s fears.

“‘Fixer Upper’ opened people’s minds to the idea of being willing to renovate to tap into value when buying a home,” Rubin says. After a decade of doubting that a home was a smart investment, the show was there doing the math its viewers: All it took to gain equity was a little sweat, grit, and patience.

But it’s wasn’t just the return on investment viewers found reassuring—even Joanna Gaines’s signature style seemed like a sound use of money. Debbie Weiss, a realtor with Keller Williams Santa Monica in California, explains that the farmhouse style is relatively low-risk in real estate: It won’t go out of style and will work in almost any home. Yes, some of Jo’s trendier elements, like words on pillows, may look dated in a few years, but they are low-cost and easy to swap out, Weiss says.

“You can take a 70s tract home, a 50s ranch, a Spanish-style home from the 80s, and inject it with that clean and timeless modern farmhouse look without a massive overhaul,” Weiss says. “Wide plank flooring, simple Shaker-style cabinetry, and a soothing palette are all elements that can be incorporated into so many existing architectural styles.”

Last April, “Fixer Upper” aired its final episode. So how exactly did Chip and Jo do to change the way Americans buy and think about their homes? According to the real estate experts I spoke with, there are two lasting effects: First-time homebuyers are more eager than ever to buy their own dilapidated homes, and they know what they’re looking for.

Renovation shows have made it clear to its audiences that some aspects of the home—like paint and carpeting—are pretty quick fixes and shouldn’t intimidate first-time homebuyers. Andrew Abrams, a member of the Denver Metro Association of Realtors noticed first-time buyers are generally taking more time researching the properties and considering the costs of a fixer-upper. Instead of just looking at the rooms, his clients are now looking at the “potential of a property,” he says.

That “potential” stretches beyond just cosmetic fixes, too. De Jong says she’s noticed that shows like “Fixer Upper” has inspired buyers to take on bigger renovations that reflect their personal styles.

According to that Realtor.com survey, these renovations include kitchen upgrades, bathroom renovations, and wood-floor installations.

However prepared these “Fixer Upper” fans may be during the home-buying process, Millennials might have a bit of a false confidence problem come demo day, says Abrams. 95 percent of aspiring renovators in Realtor.com’s survey are optimistic they’ll get a return on their makeover investments. But Abrams says many of these “glass half-full” buyers have unrealistic expectations of renovation costs and ROI.

Not surprisingly, fix-and-flip TV shows do tend to romanticize the renovation process while underestimating the costs associated with it, cautions Greg Stewart, COO at Bungalo, a real estate platform.

“The neatly packaged experience, where a buyer is hand-held by a home reno super duo that happen to be real estate agents, professional designers, general contractors, attorneys, and therapists all at once, just isn’t an experience that is accessible to most home buyers,” Stewart says.

Emile L’Eplattenier, chief real estate analyst with TheClose.com, says, shows like “Fixer Upper” have caused some buyers to overestimate their own DIY skills, too.

“Anyone can rent a sander to refinish hardwood floors, but all it takes is a few seconds of absent mindedness to damage floors beyond repair,” L’Eplattenier says.

Like many things born out of necessity, Fixer Uppers have become somewhat of a status symbol in light of the show’s popularity. While, in the past, sellers have been encouraged to take on projects to increase their listing and sales price L’Eplattenier says many listing agents have been encouraging certain homeowners to not renovate. Why? To preserve an inventory of blank-slate bargains to meet buyers’ demand.

“A perfect example of this is Brooklyn brownstones that haven’t been on the market for decades,”  L’Eplattenier says. “While just a few years ago, leaving old carpeting in place might have been the kiss of death for buyers looking for hardwood floors, today leaving carpets down with a corner turned up to expose the hardwood makes it into almost a scavenger hunt for DIY obsessed buyers.”

Of course, like everything in real estate, location plays a huge part in the phenomenon. First-time homebuyers are more likely to take a chance on a fixer-upper in places that resemble the economic conditions of Waco, Texas. Though Waco’s median home value has grown 10.7 percent in the past year, according to Zillow, homes are still relatively inexpensive there: $122,400 in Waco compared to $226,800 nationally.

In more expensive markets like New York City, buyers are less willing to put in the time and effort of a fixer upper. Karen Kostiw of Warburg Realty in Manhattan says she’s noticed that many of today’s big city buyers aren’t necessarily interested in putting on hard hats and DIYing their way to a dream home. If a buyer is already paying upwards of $1M for a one-bedroom apartment, they expect it to be new and updated homes like the ones Chip and Jo present on television.

“They want a home where no work is required and they can simply walk in with their toothbrush and start living their lives,” Kostiw says. “They aspire to find updated kitchens and bathrooms, home offices and open floor plans.”

The shortage of affordable homes has been driving home values up at unprecedented speed, outpacing wages and inflation. Just last summer, home values were rising at their fastest pace in 12 years before the market started to show signs of shifting to buyers’ favor.

Experts predict that a 2020 recession could finally cool the housing market. If (or, more likely, when) that happens, there will likely be more affordable homes—and less demand for them. That could be a good thing for first-time homebuyers with cash on hand, so long as they proceed with caution (i.e. putting enough money down and being shrewd when it comes to taking out a mortgage they can afford.

But, will more affordable housing inventory mean Millennial homebuyers will opt for turn-key properties, snubbing weekends filled with DIY projects? Or, will the love affair for fixer uppers continue? That remains to be seen—perhaps tune into HGTV in a couple of years for the answer?

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