No longer content with new cabinet pulls or a fresh coat of paint, homeowners are beginning, again, to dabble in home remodeling projects.
Contractors say they’re getting more requests for upgraded kitchens and bathrooms, as well as home additions and major improvements that cut energy bills and reinforce structures against storms. It’s a significant shift from recent years, when homeowners were focused on only vital home repairs, “preserving the investment you had,” says Steve Melman, the director of economic services for the National Association of Home Builders. The NAHB’s forecast expects a 2.4% increase in remodeling spending this year among single-family-home owners. Harvard University’s Joint Center for Housing Studies has a rosier outlook. Residential spending on additions, remodels and other major home improvements for October 2012 through September 2013 is expected to tally $145.5 billion, up 19.6% year over year, according to a January report.
Even as remodeling rebounds, however, consumers are looking for ways to save. Prerecession-style, “blowout” renovations like creating a master bedroom suite or multiroom home addition pushed the average remodel tab to between $250,000 and $350,000, says Justin Mihalik, the second vice president of the New Jersey chapter of the American Institute of Architects. Today, the average for bigger projects runs about $100,000 to $150,000, he says — and many people are spending far less. Four trends that are reshaping remodeling:
Cash Beats Credit
Homeowners are largely capping the budget at whatever they’ve saved up.
Livability, Not Resale Value
Unlike in boom times (or during the “house-flipping” craze), there’s less focus now on the added value a remodel might bring at sale.
Premium prices for energy- or water-saving appliances and fixtures have come down over the years, making those upgrades more attractive for long-term-minded homeowners.
Casting a Wide Net
During the fourth quarter of 2012, remodelers reported a 3.9% increase in inquiries over the previous quarter, according to the NARI. But the number of bids that turned into actual jobs was slightly behind, up 3.5%. “It’s taking much longer to close a sale,” says Shaw. Where boomers might talk to two or three contractors at most, younger couples are meetings with at least twice as many.