Rethinking Remodeling

People are now investing in improvements to make their homes more energy-efficient, such as Geothermal Heating applications, according to a recent home remodeling and repair report by ServiceMagic.com. Others are splurging on hot tubs and home theaters after realizing that they may be in their homes for some years to come — and want to make them as comfortable as possible.

“People are not going bigger and better, but improving what they have more cost effectively,” said Craig Smith, CEO of ServiceMagic, a Web site that connects homeowners to prescreened contractors. For instance, instead of buying new furniture, they’re repairing what they have. Or they’re deep cleaning the carpet in lieu of replacing it.

All for good reason: Money is tight, lending standards strict and in a sluggish housing market you might not recoup as much of your remodeling investment at resale.

Home improvement spending is expected to decline 12% in 2009, according to Harvard University’s Joint Center for Housing Studies. Lower financing costs may be starting to stabilize the downturn in existing home sales, but “they have not been enough to offset rising unemployment and falling consumer confidence and encourage homeowners to undertake major home improvement projects,” said Kermit Baker, director of the Remodeling Futures Program at the Joint Center, in a news release.

It’s much different than the days when home-equity lending was plentiful. Before doing anything, people are carefully considering how they should spend their money.

In the days of easy credit, “there was a feeling of ‘we can’t go wrong, let’s just get started,’” said Bill Judson, an architect with HartmanBaldwin Design/Build, based in Claremont, Calif. “Now, it’s harder to get money, in terms of credit, and homeowners are taking it a little slower and educating themselves a little more.”

Meanwhile, those who do upgrade may be in for a bargain: Costs of materials, including lumber and copper, have dropped somewhat, Judson said. The biggest price cut has been related to lower labor costs as surviving contractors struggle to compete, he added.

Kitchen and bath

The kitchen and bathroom are traditionally rooms where remodeling pays off. Some homeowners are still going through with full remodels these days, said Kimberly Sweet, editor-in-chief of Kitchens.com. But they aren’t the norm.

“A lot of people are making do with what they have, or maybe choosing to spruce up a few things and not do a full remodel,” Sweet said.

Nationally, the volume of countertop project requests rose 39% in the first quarter of 2009, compared with the first quarter of 2008, while major kitchen remodels are down 19%, according to ServiceMagic’s most recent Home Remodeling and Repair Index/Survey. The data comes from the company’s service requests; the site received 4.2 million requests from homeowners in 2008. Service requests for bathroom remodels were down 10% in the first quarter of this year, according to the report.

At the recent Kitchen/Bath Industry Show, affordable remodeling products included liquid stainless steel to refinish appliances and do-it-yourself backsplashes, Sweet said.

Re-facing or painting cabinets and updating cabinet hardware have always been an option to remodel on a budget. For replacements, there are improved cabinet options in thermofoil, she said. Consumers still gravitate toward granite countertops, but other less expensive — yet still attractive — countertop materials are available, Sweet added.

For those considering resale values, it might be best to go for minor fix-ups, she said…READ MORE

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