Home Renovation: Customer Segmentation

This article was written by our expert who is surveying the industry and constantly updating the business plan for a home renovation company.

Who wrote this content?

The Dojo Business Team

A team of financial experts, consultants, and writers

We're a team of finance experts, consultants, market analysts, and specialized writers dedicated to helping new entrepreneurs launch their businesses. We help you avoid costly mistakes by providing detailed business plans, accurate market studies, and reliable financial forecasts to maximize your chances of success from day one—especially in the home renovation market.

Who are your main customers in the home renovation market based on demographics, income, and property ownership?

The home renovation market in 2025 is primarily driven by younger homeowners, with 56% of Gen Z and 60% of Millennial homeowners planning renovation projects, compared to just 32% of Baby Boomers.

Income levels heavily influence renovation activity, with 65% of renovators earning between $100,000 and $250,000 annually. This concentration in the upper-middle to high-income brackets reflects the financial capacity required for substantial home improvement projects. Lower-income households (below $75,000) participate in the market but focus primarily on maintenance and essential repairs rather than discretionary improvements.

Long-term homeowners represent a significant segment, particularly those who have stayed in their homes due to elevated mortgage rates and high housing prices. These owners, often having built substantial equity, are choosing to invest in their existing properties rather than relocate. Property investors form another distinct segment, focusing on rental properties and fix-and-flip projects with renovation decisions driven by return on investment rather than personal preference.

DIY activity is surging across all demographics, with 55% of homeowners planning to handle more repairs and renovations themselves in 2025, driven by budget consciousness and inflation concerns. This trend spans from younger first-time homeowners learning basic skills to experienced long-term owners taking on larger projects to control costs.

What motivates each customer segment to start a home renovation project?

Renovation motivations vary dramatically across customer segments, with each group driven by distinct priorities that shape their project scope and expectations.

Gen Z and Millennial homeowners are primarily motivated by improving functionality and modernizing their living spaces. Social media plays a significant role in inspiring their renovation choices, with platforms like Instagram and Pinterest influencing design decisions. These younger homeowners seek to create comfortable, stylish environments that reflect current trends and support their lifestyles, from home offices to entertainment spaces.

Long-term homeowners face different drivers, often undertaking renovations out of necessity as their homes age and systems require replacement. They're also motivated by improving property value, adapting spaces for changing family needs (such as aging parents moving in or adult children returning home), and making deferred improvements they couldn't afford to make while burdened by higher mortgage rates in previous years.

Baby Boomers focus heavily on aging-in-place modifications, prioritizing home safety features, accessibility improvements, and comfort enhancements that allow them to remain in their homes longer. Their renovations often include walk-in showers, grab bars, wider doorways, and first-floor bedroom conversions.

Property investors are driven purely by financial returns—increasing rental income potential, enhancing resale value, and maintaining competitive positioning in the rental market. Their renovation decisions are data-driven, focusing on improvements with the highest return on investment rather than personal aesthetic preferences.

You'll find detailed market insights in our home renovation business plan, updated every quarter.

How do budget ranges differ across customer segments, and what percentage falls into each bracket?

Budget ranges in home renovation vary significantly by customer segment, with the median household spending projected at $15,000 in 2025.

Mid-range renovators—those investing $10,000 to $50,000 in projects that balance cost and quality—represent the largest market share at 52% in 2025. This segment includes many Millennial and Gen X homeowners undertaking kitchen remodels, bathroom upgrades, and moderate home improvements. These projects typically involve professional contractors but may include some DIY elements to manage costs.

Lower-budget projects under $5,000 attract price-sensitive homeowners, including first-time buyers, lower-income households, and DIY enthusiasts. While forming a smaller percentage of total market value, these projects represent a significant volume of transactions. Lower-income households typically spend minimally on improvements, prioritizing essential maintenance, with weekly spending on home improvements averaging £19.80-£25.20 for middle-income groups compared to just basic maintenance for lower brackets.

High-end renovation projects exceeding $100,000 represent a smaller but lucrative segment, primarily consisting of higher-income homeowners (earning $250,000+) and Baby Boomers with accumulated wealth. These customers are less price-sensitive and more focused on premium materials, custom design, and comprehensive whole-home renovations. Their weekly spending on improvements can reach £61.20-£88.80 or more, reflecting substantial discretionary income allocated to home enhancement.

The distribution shows clear income stratification: lower-income groups spend the least and focus on maintenance; middle-income households invest moderately in improvements; and upper-income segments drive the premium market with extensive, high-value projects. Regional variations exist, with urban markets typically showing higher budget ranges than rural areas.

What renovation types do different customer segments request most frequently?

Kitchen and bathroom remodels consistently top the list across virtually all customer segments, but the scope and style of these projects vary significantly.

For Gen Z and Millennial homeowners, kitchen renovations often focus on open-concept layouts, modern appliances, and Instagram-worthy aesthetics. Their bathroom projects emphasize spa-like features, contemporary fixtures, and efficient storage solutions. These segments also show strong interest in outdoor living spaces—decks, patios, and landscaping—that extend their entertaining areas.

Energy efficiency upgrades are growing in popularity, particularly among environmentally conscious Millennials and higher-income homeowners. These projects include window replacements, improved insulation, solar panel installations, and smart home technology integration. The combination of utility cost savings, environmental benefits, and available tax incentives drives demand in this category.

Long-term homeowners prioritize maintenance-related renovations alongside improvements. They frequently request roof replacements, HVAC system upgrades, and structural repairs that have become necessary as their homes age. They also invest in extensions and additions to accommodate changing family dynamics, such as in-law suites or expanded living areas.

Baby Boomers concentrate on accessibility modifications and safety features. Their most requested projects include walk-in tubs, curbless showers, stair lifts, wider doorways, and improved lighting. These renovations enable aging in place while maintaining comfort and independence.

Property investors focus on cosmetic updates that deliver maximum visual impact for minimal cost. They request kitchen cabinet refacing, countertop replacements, fresh paint, new flooring, and bathroom fixture updates—improvements that attract tenants or buyers without excessive capital investment.

How do customer expectations around design quality, functionality, and resale value differ between segments?

Customer expectations in home renovation reveal distinct priorities across segments, fundamentally shaping project scope and contractor selection.

Younger homeowners and premium segments place exceptional emphasis on design quality and aesthetics. Millennials and Gen Z customers expect contemporary, trend-forward designs that reflect their personal style and social media exposure. They value architectural interest, unique materials, and cohesive design narratives throughout their spaces. Quality craftsmanship matters, but visual impact and "Instagrammability" often drive their satisfaction levels.

Long-term homeowners and Baby Boomers prioritize functionality and practical improvements over cutting-edge design. They expect renovations to solve specific problems—better storage, improved workflow in kitchens, enhanced accessibility, or more efficient systems. Design aesthetics take a secondary role to durability, ease of maintenance, and long-term performance. Baby Boomers particularly value aging-in-place features that blend seamlessly with existing home character rather than contemporary statements.

Property investors maintain laser focus on cost efficiency and resale appeal. Their expectations center on improvements that attract the broadest tenant or buyer pool while minimizing investment. They favor neutral, broadly appealing designs over personalized or trendy choices. Functionality matters primarily as it affects marketability—open kitchens sell better, modern bathrooms command higher rents. Quality standards meet "good enough" thresholds rather than premium levels, balancing durability against initial costs.

Resale value considerations split the market distinctly. Investors calculate ROI on every decision, seeking improvements with proven market returns—typically kitchen and bathroom updates, curb appeal enhancements, and energy efficiency. Long-term homeowners consider resale value but balance it against personal enjoyment during their extended ownership period. Younger homeowners in starter homes focus heavily on resale positioning, while those in forever homes prioritize personal preference and lifestyle fit over market considerations.

This is one of the strategies explained in our home renovation business plan.

Which customer segments are most price-sensitive versus those focused on premium quality or sustainability?

Price sensitivity in home renovation varies dramatically, with clear dividing lines based on income, age, and renovation motivations.

Lower and middle-income homeowners demonstrate the highest price sensitivity, carefully scrutinizing estimates, comparing multiple bids, and frequently opting for DIY solutions to reduce costs. These segments prioritize getting projects completed within tight budgets, often choosing mid-range materials and products over premium options. They're highly responsive to promotions, seasonal discounts, and value-engineering suggestions that reduce project costs without compromising essential functionality.

First-time homeowners, often overlapping with younger Millennials, exhibit significant price consciousness as they balance renovation desires against limited equity and other financial obligations. They actively seek budget-friendly alternatives, may phase projects over time to spread costs, and extensively research options to maximize value. The 55% of homeowners planning more DIY work in 2025 primarily come from these price-sensitive segments.

In contrast, higher-income homeowners and Baby Boomers show markedly lower price sensitivity. With household incomes exceeding $250,000 and often substantial accumulated wealth, these segments prioritize quality, longevity, and achieving their vision over cost considerations. They're willing to invest in premium materials, custom solutions, and experienced contractors who deliver superior results. Price becomes less decisive than reputation, portfolio quality, and confidence in execution.

Sustainability and energy efficiency create an interesting dynamic. Environmentally conscious Millennials and Gen Z homeowners actively seek sustainable options—solar panels, energy-efficient appliances, eco-friendly materials—even at premium prices. They view these investments as aligned with their values and justified by long-term savings and environmental benefits. Higher-income Baby Boomers also invest in energy efficiency, motivated by utility savings and comfort improvements, with less price resistance to sustainable solutions.

Property investors occupy a unique position—extremely price-sensitive regarding costs but willing to invest where clear ROI exists. They'll choose standard materials for most finishes but may invest in energy-efficient systems if utility savings enhance rental appeal or reduce operating costs.

How does decision-making differ among first-time homeowners, long-term homeowners, and property investors?

Decision-making processes in home renovation vary significantly based on homeowner experience and investment objectives, affecting everything from contractor selection to project management.

What channels do different customer groups use to research and select renovation contractors?

Channel preferences for researching and selecting renovation services reveal a clear generational and demographic divide that directly impacts marketing strategy.

Younger homeowners—primarily Gen Z and Millennials—heavily utilize digital channels throughout their decision journey. They begin with online searches, reading reviews on platforms like Google, Yelp, and Houzz. Social media plays a central role, with Instagram and Pinterest serving as primary inspiration sources while TikTok increasingly influences renovation decisions through before-and-after videos and contractor showcases. These segments expect contractors to maintain strong digital presences with professional websites, active social media, and video content demonstrating their work and expertise.

Online platforms and marketplaces like Angi, HomeAdvisor, and Thumbtack attract first-time homeowners seeking vetted contractors and transparent pricing. These customers value the platform's screening processes, review aggregation, and quote comparison features that reduce decision-making risk. They're also influenced by influencer recommendations, YouTube channels featuring renovation content, and online communities where they can discuss projects and contractor experiences with peers.

Older generations, particularly Baby Boomers and Gen X long-term homeowners, demonstrate strong preference for traditional referral channels. Personal recommendations from friends, family, and neighbors carry the most weight in their contractor selection process. They trust word-of-mouth endorsements from people they know who have completed similar projects. These segments also value showroom visits to see materials and finishes in person, preferring tactile experiences over digital representations.

Professional networks and established relationships significantly influence contractor selection for experienced homeowners. Many return to contractors they've used previously or seek referrals from real estate agents, architects, and interior designers within their professional circles. Trade shows, home improvement expos, and local business associations provide additional discovery channels for this demographic.

Property investors utilize specialized channels including real estate investor networks, property management companies, and contractor databases focused on investment properties. They often develop ongoing relationships with contractors who understand investor needs—speed, cost-efficiency, and rental market appeal—and can handle multiple properties systematically.

Which financing options do different customer segments prefer, and what percentage of projects are financed versus paid in cash?

Financing patterns in home renovation reveal distinct preferences across customer segments, with approximately 54% of major renovations utilizing home equity loans or lines of credit, 29% funded through savings, and 10% charged to credit cards.

Home equity loans and HELOCs dominate financing for substantial projects, particularly among long-term homeowners who have built significant equity. These financing vehicles offer lower interest rates than other borrowing options and tax-deductible interest in many cases. Homeowners with properties valued well above their mortgage balances increasingly tap this equity rather than relocate in the current high-rate environment, using funds for comprehensive kitchen remodels, additions, or whole-home renovations.

Cash payments from savings or checking accounts remain prevalent, with 66% of homeowners using this method for at least partial project funding. Baby Boomers and higher-income Millennials show similar preferences for cash financing, having accumulated sufficient savings or inheritance to fund renovations outright. Smaller projects under $15,000 are predominantly cash-financed, while larger projects exceeding $50,000 more commonly involve financing combinations.

Credit cards account for 30% of renovation financing, particularly for smaller projects and among younger homeowners. First-time buyers and budget-conscious renovators often use credit cards for immediate needs, sometimes leveraging promotional 0% APR offers to spread payments without interest. However, this approach carries higher risk when projects exceed planned budgets or timelines extend beyond promotional periods.

Personal loans represent 17% of renovation financing, appealing to homeowners without sufficient home equity or those preferring unsecured debt. These fixed-rate, fixed-term loans provide predictable payments but typically carry higher interest rates than home equity products. Middle-income homeowners undertaking moderate renovations ($10,000-$30,000) frequently choose this option.

At least one-third of all major renovations are financed or partially financed, with this percentage increasing as project size and homeowner wealth rise. Property investors often utilize specialized investment property financing or business lines of credit, treating renovations as business expenses with different financial considerations than residential homeowners. The trend toward financing has accelerated as home values have increased, providing more equity to access, while simultaneously making renovation-in-place more attractive than purchasing in expensive markets.

How do project timelines and tolerance for delays vary among customer segments?

Timeline expectations and delay tolerance differ substantially across renovation customer segments, directly impacting project management and contractor selection.

Higher-income homeowners and property investors demonstrate the least tolerance for delays, expecting efficient project completion within aggressive timelines. Premium clients often pay for expedited schedules, accepting higher costs to minimize disruption to their lives or, for investors, to reduce holding costs and accelerate returns. These segments view time as money—each day of delay represents lost rental income, extended carrying costs, or prolonged personal inconvenience they're unwilling to accept.

Property investors particularly demand strict timeline adherence, often building penalty clauses into contracts for missed deadlines. They expect contractors to have robust project management systems, adequate crew sizes, and contingency plans to maintain schedules. Delays can cascade across their portfolio, affecting lease-up schedules, refinancing timelines, or planned sales, making punctuality a primary contractor selection criterion.

DIY enthusiasts and lower-budget renovators show significantly greater tolerance for extended timelines. Operating under tighter financial constraints, they're more accepting of schedule slippage, understanding that budget limitations may slow progress. Many intentionally plan phased projects, completing work as funds become available rather than adhering to compressed schedules. The 55% of homeowners doing more DIY work in 2025 often work around personal schedules, accepting that projects may take months rather than weeks.

Long-term and older homeowners present mixed timeline preferences. While they generally prefer reasonable timelines to minimize disruption, they often show greater patience than younger segments, particularly for quality work or when projects involve aging-in-place modifications crucial to their long-term housing security. They may prioritize getting renovations done correctly over getting them done quickly, especially when they've lived through previous rushed projects that required costly fixes.

Younger homeowners, particularly first-time buyers excited about their properties, often expect quick turnarounds but may adjust expectations when confronted with budget realities. They balance desires for immediate results against financial constraints, ultimately accepting reasonable timelines when they understand the relationship between speed, cost, and quality.

We cover this exact topic in the home renovation business plan.

What level of involvement in project management does each customer segment typically prefer?

Project involvement preferences vary dramatically across customer segments, requiring contractors to adapt communication and management styles accordingly.

• Younger and first-time homeowners prefer collaborative approaches: They want regular updates, to weigh in on material selections, and to understand decision points throughout projects. These segments desire active involvement without necessarily managing day-to-day operations, valuing contractors who educate them during the process and welcome their input on design choices.
• DIY-oriented homeowners maintain hands-on involvement: The 55% of homeowners doing more DIY work in 2025 often manage portions of projects themselves, hiring contractors only for specialized tasks requiring licenses or expertise beyond their capabilities. They expect contractors to work collaboratively, providing guidance while respecting their contributions and coordinating around owner-performed work.
• Busy professionals and dual-income households lean toward hands-off management: With limited time for renovation oversight, they prefer contractors who handle all aspects independently, providing periodic updates without requiring constant decision-making. These clients value comprehensive project management services, including material selection, permitting, and coordination with subcontractors.
• Property investors overwhelmingly prefer hands-off approaches: Managing multiple properties or maintaining other business priorities, they want contractors who independently execute agreed-upon scopes with minimal owner involvement. They expect clear milestones, budget tracking, and issue resolution without constant consultation, intervening only for major decisions or budget exceptions.
• Baby Boomers and long-term homeowners split between highly involved and completely delegated approaches: Some, particularly those with accessibility concerns or specific aging-in-place needs, remain closely involved to ensure requirements are met. Others, having completed multiple renovations over decades of homeownership, prefer to delegate completely to trusted professionals, intervening only when necessary.

Which external factors influence each segment's renovation decisions most strongly?

External factors shape renovation decisions differently across customer segments, with economic conditions, incentives, and regulations playing varying roles.

Lower-income and first-time homeowners show the highest sensitivity to public incentives and regulatory requirements. Energy efficiency rebates, tax credits for solar installations, and weatherization assistance programs significantly influence their renovation choices, often making projects financially feasible that would otherwise be unaffordable. These segments actively research available incentives, timing projects to maximize benefits, and prioritizing improvements with substantial rebate offerings.

Market conditions—particularly high home prices and elevated mortgage rates—influence nearly all segments to renovate rather than relocate. Long-term homeowners who might have moved to larger homes or different neighborhoods are instead investing in their current properties, driven by mortgage rates two to three times higher than their existing loans. This "lock-in effect" has shifted substantial capital from the moving market into renovation spending, particularly for additions, layout reconfigurations, and comprehensive updates that make current homes more suitable for extended occupancy.

Rising energy costs motivate renovations across segments but particularly among middle-income homeowners and retirees on fixed incomes. The combination of utility cost savings and available tax incentives drives investment in energy-efficient windows, improved insulation, heat pumps, and solar installations. These improvements offer both immediate comfort benefits and long-term cost reductions that appeal to budget-conscious owners.

Property investors are heavily affected by rental market regulations, property tax changes, and local resale dynamics. Rent control ordinances, tenant protection laws, and occupancy regulations shape their renovation priorities, focusing on improvements that maximize allowable rents, attract quality tenants, or position properties for optimal resale. Local market conditions—whether buyers prioritize modern finishes, outdoor spaces, or home offices—directly influence investor renovation choices, as they must align improvements with market demands to achieve returns.

Code changes and permit requirements impact all segments but affect decisions differently. Premium clients absorb compliance costs as project necessities, while budget-conscious homeowners may delay or modify projects when new regulations increase expenses. Experienced renovators and investors build regulatory compliance into their planning, while first-time homeowners often face unexpected costs and timeline impacts when discovering permit and code requirements.

Conclusion

This article is for informational purposes only and should not be considered financial advice. Readers are encouraged to consult with a qualified professional before making any investment decisions. We accept no liability for any actions taken based on the information provided.

Sources

1. Fortune - Gen Z and Millennial Homeowners Renovation Trends
2. Fortune - Homeowners Renovations and Home Equity
3. Block Renovation - How America Renovates in 2025
4. This Old House - Home Renovation Trends
5. NAHB - Remodeling Market Growth 2025
6. Fixr - Home Remodeling Statistics and Trends
7. Hillarys - Home Renovation Statistics
8. Angi - Lower Income Households Home Maintenance Spending
9. Fortune Business Insights - Home Renovation Market
10. Extension Architecture - Home Renovation Trends 2025