Return to Remodeling Normalcy

BY ERIK J. MARTIN ON SEPTEMBER 22ND, 2016

The housing downturn a few years ago caused many homeowners to retreat within their shells and abandon thoughts of residential improvement. But now, like the tortoise that beat the hare, they’re back in the remodeling race and ready to reap the rewards of renovation, suggests a new study.

The Joint Center for Housing Studies of Harvard University’s most recent quarterly Leading Indicator of Remodeling Activity report expects growth in home improvement and repair expenditures to hit 8 percent by the beginning of 2017, far outpacing the 4.9 percent historical average. Annual spending is anticipated to reach $321 billion by the middle of next year. That’s good news for both the real estate market and remodeling industry, say the experts.

“Homeowners should be rejoicing right now, as the past few years have been difficult for those who want to sell their homes,” says Angie Hicks, founder and CMO of Indianapolis-based Angie’s List. “This report’s findings are a signal for homeowners to immediately start getting their properties into shape to take advantage of better economic conditions and the fact that more renters are looking to buy homes due to rental rate increases.”

Karl Champley, an award-winning builder and developer, the season one winner of HGTV’s “Ellen’s Design Challenge,” and a member of a trend-forecasting panel for the National Kitchen and Bath Association (NKBA), says remodeling activity is on the rise based on several factors.

“Currently, there is a small unemployment figure, which creates more disposable income, and interest rates remain low, which makes it easier to borrow money for home improvement projects,” Champley says. “Stats also show that many homeowners are living in their homes longer and willing to invest in making their abodes more livable and enjoyable.”

Others are motivated to forgo new construction and purchase a fixer-upper they can renovate for less, and many who had delayed listing their homes due to previously poor market conditions are now eager to make improvements in order to sell and recoup a higher resale value.

“If you haven’t updated your home in a while, chances are pretty good that you’re behind. Part of successfully selling a home is looking at the competition and seeing if there are popular renovations going on in the neighborhood you may need to keep pace with,” says Joshua Jarvis, owner of Jarvis Team Realty in Duluth, Georgia.

Champley says your smartest remodeling investments remain kitchen and bathroom redos, although these can be among the most expensive rooms to upgrade.

“Adding an exterior deck can be a great way to extend your dining experience without making any major alterations to your home, and adding a handsome entrance door to your home is an inexpensive way to create great curb appeal and value,” Champley says.

Hicks cautions, however, that if you want to sell soon, it’s okay to “keep up with the Joneses” but don’t try to outdo them with lavish upgrades. Instead, consult closely with your real estate agent and consider smaller improvements, such as fixing leaks, focusing on curb appeal and adding a fresh coat of paint.

“If you want to sell in a few years, an investment in a major remodel makes more sense, as you’ll have time to enjoy the improvements in a more livable house and be in a great position as the market continues to heat up,” Hicks says. “My rule of thumb is don’t spend more than 20 percent of your current home’s value on remodeling projects or you likely won’t maximize your investment.”

Regardless of the scope of your chosen project, Champley recommends enlisting the help of an experienced designer who can better ensure a more desirable outcome.

“A home that has been designed correctly feels right with all elements complementing each other, not fighting each other,” Champley says.

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