Home remodeling is expected to grow this year by 5% from 2009, says an April 15th study from the Joint Center for Housing Studies of Harvard University. Since the peak of the boom in 2006, the industry has been slumbering along, but after years of the economic recession people are starting to once again fix up and remodel their homes.
During the previous real estate bubble, homeowners were quick to update their property with lavish improvements to help increase the value of their investment. Now, the updates are smaller and cheaper, but still help increase the home value. The difference is that before the boom, people were renovating their home to resell and move to bigger homes. Now, homeowners are realizing that they won’t be able to move because of low equity and transaction costs that outweigh the down payment that would normally be available.
Instead of costly master bedroom suites and elaborate kitchen redesigns, owners are opting for cost-saving improvements like better insulation, low-flow toilets, and energy-efficient appliances. Since people know they’ll be staying in the home longer and will not be able to pass off these little tweaks off the next owner, these smaller projects will benefit both the current and future owners and still increase the worth of the property without completely emptying their pocketbook.
Retailers in the business of home-improvement such as Lowe’s and Home Depot are seeing a rise in purchases too of simpler updates like flooring updates, countertops, ceramic tiling, paint, bath fixtures, cabinetry and faucets. Since home prices are slumping, the equity for homeowners to take advantage of has lessened. Banks are also making it harder for borrowers by making credit less available than before the bubble popped. All of this adds up to people thinking of the long-term commitment to their homes and choosing to remodel over moving.
Contributor, designer & admin for JohnHart Gazette.
