• You came through the housing bust and recession far more debt-averse than you were before.
• You’ve been reluctant to consider selling your house because you don’t believe you’ll get what it’s really worth.
• Buying a new home is out of the question, even with today’s low interest rates, because it’s so difficult to qualify for a mortgage.
• You’ve gradually come to the conclusion that it’s smarter to improve the house you already own – spend some money on making it more comfortable, more up to date – and just stay put for a while.
Whether you share them or not, sentiments like these are having profound effects on real estate markets across the country, fueling post-recession interest in remodeling. In fact, according to federal estimates, by late last year the annualized dollar value of expenditures on renovations outstripped expenditures on newly constructed single-family homes – a huge change from pre-recession years, when the ratio was sometimes 3-to-1 in favor of new construction.
Underscoring this trend: In late January, the National Association of Home Builders’ remodeling market index hit its highest level in five years. It’s not that remodeling is moving into boom territory, said David Crowe, chief economist of the association, but rather that for many consumers, fixing up their house now fits their sentiments – and their finances – far better than selling or buying.
Interviews with builders and remodelers in different parts of the country point to important changes in homeowner strategies. In Seattle, Joe McKinstry, president of Joseph McKinstry Construction Co., says inquiries about possible remodeling projects have nearly tripled in the past 12 months.
“I feel like people are starting to say, ‘Well, we’re not going to move anytime soon because, if we do, we’re going to get 30 percent less than the house is worth. Why don’t we do something in the kitchen or bathroom for our own enjoyment, since we’re not going anywhere real soon?’ ”
Generally the projects that people want to do are no longer on the grand McMansion show-off scale, but smaller, more modest, less costly efforts than five to seven years ago, with more emphasis on finishing details and quality than square footage. “Now [owners] are being much more judicious about how they spend their money,” said McKinstry. “They’ve gotten smarter and more analytical” about what they want to invest in their real estate.