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Real Estate News and Advice |
October 10, 2008 |
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Homeowners Staying Longer, Moving Less, Improving More
by Al Heavens
When it comes to homeownership, we're staying longer, moving less, and spending more on repairs and improvements. Last year, the National Association of Home Builders finally persuaded the Census Bureau to change the way the government calculates the dollar value of remodeling. By doing so, spending on such products was shown to be 10 percent higher than first believed. In fact, the figures had been under-reported for 16 years, NAHB officials said. Part of the reason for the lower figures was the nature of the remodeling industry. There are more than 800,000 businesses that can be considered involved in remodeling. About 550,000 of this total are single contractors with no payroll. About 40 percent of these sole proprietorships have gross receipts of less than $100,000 -- and many of them don't last long. Competition takes a heavy toll. A study by the Joint Center for Housing Studies at Harvard found that half the firms in business in 1987 were gone by 1992. So now we know officially that the value of remodeling projects in the United States tops $150 billion each year. With official figures taken care of, the NAHB has begun quarterly surveys of general contractors to determine, among other things, the kinds of jobs remodelers are being hired to do. The Remodeling Market Index is designed to be an accurate gauge of the industry, which the builders' group believes may outstrip residential construction in dollar value as baby-boomers age and mobility rates decline. Compare the mobility rates recorded in the 1960 and 1990 censuses. The proportion of owners living in their homes for more than 20 years increased in all regions of the country, from a national average of 18 percent in 1960 to 26 percent in 1990. The slowdown in the percentage of people moving was most dramatic in the Northeast, where the proportion of owners living in their homes for more than 20 years jumped to 34 percent from 22 percent over those three decades. The percentage of Americans moving each year declined between 1990 and 2000 (17 percent vs. 16.1 percent). The second-quarter survey asked remodelers (those with a median annual dollar volume exceeding $500,000) to identify their most common remodeling jobs. The top three jobs were kitchen remodeling (62 percent), bathroom remodeling (61 percent) and room additions (58 percent). In response to the question that asked for the most common energy-saving materials and products installed in their projects, 76 percent identified low- e (emissivity) windows, followed by insulated exterior doors (71 percent), upgraded insulation (69 percent) and ceiling fans (67 percent). These responses support a recent report by Home Depot, which said first-half sales of energy-saving appliances and materials by consumers up substantially over the same period last year, in part because of concerns over power shortages on the West Coast. Kitchen and bathroom remodeling projects tend to reflect changes in personal taste. Room additions, however, are signs of increase in space needs because of additional children or people needing room to accommodate aging parents. There are a couple of other factors that tend to favor remodeling projects. One is price. While the economy has boosted median sale prices of houses just about everywhere over the last five years, the houses these sellers want to trade up to have gotten more expensive as well. The inventory in many areas is low, limiting choices. In addition, if you like your neighborhood and the school your children attend -- as well as your house -- wouldn't you try to find a way to stay put? Not every remodeling job is considered major project. In a typical year -- if we can take 1999 as typical -- 30 percent of the billions spent nationwide went to maintenance and repairs, while 29 percent was for alterations. Additions account for 11 percent, major replacements for 20 percent, and outside additions and alterations (garages and porches) for 10 percent. Homeowners tend to remodel within 18 months to three years of the date they buy the house. Waiting before you spend is a good idea. Do you need a kitchen right away, or should you make do and save for one you really want? And don't for a minute believe that everything you do will reap benefits when you go to sell. As tastes change, projects that might have once reaped a 100 percent return on what you spend might only bring you 50 percent at sale time. The experts also recommend if you spend money on your house to sell it, let it first be to replace a leaky roof, a non-working furnace or a porch on the verge of collapse. And if the new owners want a dream kitchen, let it be their dream, not yours. For more articles by Al Heavens, please press here. Published: August 1, 2001 Use of this article without permission is a violation of federal copyright laws. Related Articles:
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