Remodeling is rebounding and it's about time.
Just as the sales-driven housing recovery is bringing home the equity bacon for many underwater homeowners, home improvements can further boost home values and help sustain both the housing recovery and economic growth.
Spending on home improvements increased 9 percent in 2012, the first increase since 2007, according to the Joint Center for Housing (JCH) Studies at Harvard University.
When housing crashed in the late 2000s, so did the home improvement sector, leaving in its wake some 2.4 million so-called "inadequate homes."
These properties were likely converted to rentals or nonresidential use, became vacant or were permanently erased from the housing inventory, JCH says.
"With the US economy and housing market now recovering, investment in the nation's housing inventory is also picking up. Lenders and new owners are rehabilitating millions of foreclosed properties. Older homeowners are retrofitting their homes to accommodate their future needs... And with the huge echo-boom population moving into the home buying market over the coming decade, the remodeling industry can look to an even more promising future," the JCH report found.
The National Association of the Remodeling Industry (NARI) says property owners are feeling more secure about their economic future, according to its fourth quarter 2012 Remodeling Business Pulse Data.
Many property owners are using home improvements to increase their home's value, improve salability and enhance their investment in their home, but others are catching up on deferred maintenance, repairs and upgrades.
"Remodelers are indicating major growth in the future, with many saying that clients are feeling more stable in their financial future and their employment situations; therefore, they are spending more freely on remodeling needs,” says Tom O'Grady, chairman of NARI's Strategic Planning & Research Committee.
Among industry growth indicators NARI's membership found from the third quarter 2012 to the fourth quarter 2012, current business conditions were up 2.1 percent; customer inquiries up 3.9 percent; requests for bids up 3.7 percent; conversion of bids to jobs, up 3.5 percent and value of jobs completed up 4.3 percent.
In many cases, homeowners are remodeling instead of moving. That's especially true among homeowners with mortgages that are larger than the value of their home, even with a recovery underway.
These homeowners couldn't sell for a profit and rather than taking a loss, are hunkering down enjoying the benefits of home improvements beyond the increased value some projects can add.
Dan Fritschen founder of Sunnyvale, CA-based RemodelOrMove.com says, in addition to the investment aspect, there are a host of reasons to remodel instead of moving.
Without a remodeling do-over, it could be tough to find a floor plan you need. This is true, especially, if you have Universal Design requirements, want to add a loft or create some other unique space.
Likewise, if your landscaping is already pristine or you have additional grounds you'd like to plant out, it may not be easy to duplicate your existing landscaping or find potential for more.
The same is true if you already have a quiet neighborhood, friendly, community-active neighbors and kids who are happy with their nearby friends. If your neighbors are also remodeling and have well cared -for homes, you will all help bring out the value of your homes and the neighborhood.