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June
24, 2009
Tips & Trends
From
Rory S. Coakley on some of the latest real estate news
and happenings.
Remodelers build on spark of recovery
Drive around the neighborhoods of the greater Washington
area and you may literally see more signs of economic
recovery. Bright yard signs announcing a new roof, windows
or an addition used to be ubiquitous just a few years
ago. The signs, along with the remodeling jobs, are few
and far between these days.
According to the latest National Association of Home Builders'
(NAHB) Remodeling Market Index (RMI), the residential
remodeling market showed signs of improvement during the
first quarter of 2009, although the numbers still indicate
that the majority of remodelers view market conditions
as less than favorable.
"Conditions remain below average and are down slightly
from this time last year," says David Crowe, NAHB chief
economist and senior vice president. "The gains over the
last quarter and improvement in market expectations suggest
a spark to the start of recovery in the remodeling market."
If you're trying to sell a home, it may be a good time
to make some improvements.
"When you've got lots of similar houses for sale," says
Gopal Ahluwalia, NAHB vice president for research, "the
one with new siding will be the one that stands out. It's
no guarantee - but curb appeal is definitely a factor,
given the state of the housing market."
Things were certainly better for remodelers during the
housing boom, but the remodeling market is actually doing
better than the housing market now. According to the National
Association of Realtors (NAR), the overall housing market
declined 7 percent in the past year while the home-remodeling
market dipped just 3.86 percent between 2007 and 2008.
Meanwhile, Remodeling magazine's 2008 "Cost vs. Value
Report," produced in conjunction with NAR, found that
homeowners can recoup value from their home-improvement
investments. The report estimates the percentage of investment
homeowners can expect to recoup for a variety of different
projects, from using fiber cement siding (86.7 percent)
to adding a home office (54.6 percent).
On average, homeowners can expect to recoup a little more
than 67 percent of their investment. That's down from
recouping an average of nearly 87 percent of the investment
during the height of the housing boom, but it is still
an indication that an improved home is better than one
with no improvements at all.
Still, experts caution that any home improvement should
be done with an eye toward improving lifestyle - not necessarily
for improving market value.
"These days, home improvement as investment is a secondary
factor," says Walter Molony, an NAR spokesperson. "Most
are lifestyle improvements."
Josh Rosenthal of Rosenthal Homes in Potomac agrees.
"People are more focused on basic living spaces these
days," says Mr. Rosenthal. "They're looking to improve
bedrooms, baths, kitchens and family rooms. They're not
really as interested in the home theaters and 'fun spaces'
that they were a few years ago."
In other words, create the home you want to live in, not
the one you expect to sell for the most profit. Remodeling
contractors have less to do these days, so they may be
more than willing to bargain or take on a project they
would have been reluctant to accept in 2005.
"Our job size has decreased," says Chris Landis of Landis
Construction Corp. and Landis Group Architects, a Takoma
Park-based design-and-build firm formed in 1990. "We've
gone from an average $225,000 job to about $150,000.
" With homeowners spending less and having a harder time
getting financing, many remodeling companies looking to
remain in business are accepting small projects or adding
handyman divisions that focus on jobs like fixing faucets,
recaulking tubs and showers, adjusting hinges and changing
windows.
"We've started a small-projects division," says Mr. Landis,
whose business has also added more services and expanded
into Northern Virginia. "Any company experiencing this
downturn needs to modify its business in order to survive
." Today's homeowners aren't looking for dramatic transformations
or to spend conspicuously, even when they can afford it.
"A lot of the projects we do are higher-end," says Mr.
Rosenthal. "But even if they can afford it, our customers
are less likely to buy that $10,000 stone countertop.
" What characterizes many home-remodeling projects these
days is what homeowners need versus what they want.
"There are really two kinds of home-remodeling projects,"
says Mr. Ahluwalia. "There's the 'my roof is leaking'
project and the 'I don't like my kitchen or bathroom'
project. These days, about 50 percent of projects can't
be postponed any longer."
What projects are most likely to return value?
Exterior projects like siding, window replacements and
decks - things practically guaranteed to enhance curb
appeal - add the most value, according to the "Cost vs.
Value Report."
"The best returns are cosmetic," says Mr. Molony.
What are the most popular remodeling projects? Kitchens
and baths are popular because these are the rooms that
can make a home look "dated."
"Everyone wants to have a fancy kitchen - whether you
are cooking or not," says Mr. Ahluwalia. "The kitchen
has become more than a cooking place.
" Adding a bath is popular because few homeowners are
content with - or are able to sell - homes that have just
one bath.
Yet homeowners don't want to spend a lot of time taking
care of their new rooms.
"People want maintenance-free countertops and floors,"
says Mr. Ahluwalia.
Mr. Landis notes that a number of his clients have made
modifications to allow them to age in place in their homes
or provide accommodations for an aging parent.
"They need an added suite or basement remodel," he says.
"Often, it's the parent who pays for the work, and the
homeowner gets the added value to the home."
Mr. Rosenthal has also seen more of these types of remodeling
projects.
"Whether it's due to market conditions or the love of
the house, adapting your home for the next 10, 20 or 30
years is a good investment," says Mr. Rosenthal. "Given
the expense of real estate, more and more people are looking
to stay in their homes [longer]."
Today's home remodelers are also interested in energy
efficiency, especially with rising fuel costs. Energy
Star appliances, spray-foam insulation and efficient heating
and air conditioning systems are all on the minds of today's
environmentally conscious homeowners.
"Consumers are concerned with the rising cost of energy,"
says Mr. Ahluwalia. "And people are more health-conscious
than they used to be [when it comes to what goes into
their homes]."
Remodelers interested in the environment often use green
items such as local lumber and low volatile-organic-compound
paint.
Green items were seen as "specialty materials" just a
few years back but are being used in standard practice
by many remodelers.
"We provide green things as a basic package," says Mr.
Landis.
Finally, NAHB notes an added benefit in the form of tax
credits for energy-efficient home improvements, part of
the new economic stimulus package that provides financial
incentives for homeowners to go green on their renovation
projects in 2009 and 2010.
Source:
Washington Times By Lisa Rauschart
If you would like to suggest a topic for comment in one
of our future emailers, please let me know. You can always
reach me at rory@coakleyrealty.com
or by phone (301) 340-8700 ext. 101. I look forward to
hearing from you!
Rory S. Coakley
Coakley Realty, Inc.
20 Courthouse Square - Suite 106
Rockville, MD 20850
www.coakleyrealty.com
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