Real Estate Investors, Looking to Differentiate Their Properties, are Key Sources of Market Strength
By NKBA Editorial Staff
Traditional homeowners aren’t the only factor in the expected expansion of the residential kitchen and bath market this year. According to findings reported in the NKBA 2025 Kitchen & Bath Market Outlook, this modest growth will also be supported by renovations undertaken by so-called “fix-and-flip” investors, as well as rental property owners.
In both cases, these investors view beautiful kitchen and bath designs as differentiators that will enhance the value of their properties — and their attractiveness to buyers and renters. Collectively, they’re expected to contribute more than $47 billion to the residential K&B market this year.
The report includes additional insights about how this group of investors will be a significant part of the K&B market in 2025:
“Fix and flip” investing will grow slowly
Nearly all flipped homes include a kitchen and bath remodel, which means investor K&B spending is closely tied to overall fix-and-flip trends. K&B industry pros report that they expect moderate growth in fix-and-flip kitchen and bath spending 2025 as these specialized investors look to make their properties stand out through upgrades in two essential areas of the home.
Flippers see high ROI in kitchen and bath upgrades
Flippers tend to invest most heavily in kitchen and bathroom renovations, indicating a higher ROI compared to upgrades to other areas of the home.
On average, 24% of flippers’ budgets are spent on kitchens, and 19% is spent on baths, making these two spaces the primary vehicles for increased home value through repairs and renovations.
Flippers spend an average of $14,700 on a kitchen renovation and $11,500 on a bathroom renovation.
Flips expected to increase after recent decline
K&B spending on investment homes declined last year as flipped home transactions declined. In Q4 2024, 44,000 units were sold, down 4.6% year-over-year. However, analysts expect that trend to reverse in 2025.
Rental properties continue to be a significant K&B end market
Rental properties remain an important part of the K&B renovation landscape, and these renovations are predicted to total $40.3B this year. Multifamily units will account for the majority of this spending at $21.7 billion (64%), while single-family rentals renovations will total approximately $18.6 billion (46%).
Resilient home features, such as hard surface flooring, seamless countertops and stainless-steel appliances, are gaining in popularity.
“We expect that new construction K&B spending will dip slightly in 2025 as builders confront multiple challenges, including rising new home inventory levels, increasing resale competition and a stubbornly high mortgage rate environment,” said NKBA I KBIS Global President & CEO Bill Darcy. “That makes the spending from residential real estate investors like flippers and rental property owners even more essential to keeping the residential K&B market stable and resilient.”
To learn more about the demographic trends that are shaping the K&B market, download the full NKBA 2025 Kitchen & Bath Market Outlook report here.
