CAMBRIDGE, MA -- Take 1998's record 4.8 million existing home sales, add the record 888,000 new home sales and toss in an unprecedented 69.1 million homeowners and what do you have?

A bang-up residential remodeling market worth a record $150 Billion, according to the Joint Center for Housing Studies at Harvard University.

And with so much at stake -- a home is often the most valuable asset you'll ever own -- the report is being used as a focal point to hammer home related consumer caveats.

As soon as America moves in it fixes up the $8 trillion its already invested in home ownership, the center says in "Improving America's Housing," a landmark study documenting the nation's penchant for home improvements.

Among the university's findings:

• One in ten homeowners who spends more than $5,000 a year on remodeling accounts for more than 50 percent of all remodeling expenditures.
• Within two years of having a child, more than 75 percent of home owners buy a home improvement and they spend 40 percent more than those who don't have children.
• First time home buyers spend an average of $2,000 more on remodeling during their fist two years of their home purchase than do long time home owners. Trade-up buyers spend three times more than first-time buyers.
• Do-it-yourselfers perform the same number of kitchen upgrades and more bath upgrades than do contractors hired by homeowners.
• Those who move into homes at least 15 years old immediately purchase an average $2,000 more in improvements than homeowners who don't move.

Why so much fixing up?

"Remodeling helps preserve the asset by shoring up its value while enabling families to adapt their homes to contemporary styles, higher health and safety standards and changing household needs," said Nicolas P. Retsinas, director of the Cambridge, MA-based Joint Center.

In high price areas like Santa Clara County, CA where the average price of homes broke the half million dollar barrier in February, according to the San Jose Real Estate Board, others fix up instead of moving up because it's simply more affordable.

Like any vast market, the home remodeling industry isn't without its fly-by-night scam artists preying on the demand and other dubious characters claiming professionalism.

"Many general contractors hire sub contractors to do the actual repair or remodeling work and if they aren't paid can lay claim to your home with a lien," said Rebecca Elliot, San Jose Real Estate Board's public affairs director of spokeswoman for the board's Property Rights Protection League.

Elliott and others suggest the following recommendations to lessen the possibility of problems with contractors, subcontractors, or suppliers:

• Screen contractors referred to you by friends, families, co-workers and others you trust.
• Get at least three written estimates. If there are large differences, especially between the low bid and the others, make sure the quality of materials and amount of work matches in all bids.
• Hire only licensed, bonded contractors. Verify that the contractor carries valid and sufficient insurance, worker's compensation and liability insurance.
• Check the contractor's license status with the appropriate licensing board, before signing on the dotted line.
• Check references. Drive by property they has been remodeled. Ask the homeowner to inspect the contractor's work.
• Put all the details in a written contract, including any changes made during construction. Leave no blanks unfilled.
• Require lien releases from all sub-contractors, vendors and suppliers and make sure they've been paid in full by the general contractor before you make a final payment to the general contractor.

"These recommendations will lessen the risk of receiving inferior work or supplies, or of having a lien placed against the home by a sub contractor or supplier who was not paid by the general contractor," said Elliott.

Home improvement resources are available from the following Web sites, among others:

• American Institute of Architects
• Building Industry Association
• Hanley-Woods Remodeling Online
• Home Time
• House Net
• ImproveNet
• National Association of Home Builders Guide to Remodeling
• National Association of Home Builders Cost vs Value Report
• National Association of the Remodeling Industry
• Bob Vila, This Old House

Published: March 19, 1999

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