To sell a home in many parts of the country, sellers need to outshine the competition, must be willing to negotiate on price and have to be prepared for months on the market. It’s enough to make some sellers sit this season out, waiting for conditions to improve.
But some homeowners will take it one step further, figuring that if they can’t sell their home, they might as well make it more comfortable during the time they’re living in it.
“There is a lot of attractiveness to thinking about staying put and making changes to the current home,” said Kermit Baker, a senior research fellow at Harvard University’s Joint Center for Housing Studies.
The center is expecting remodeling dollars spent this year to decline, considering the home-price decreases in many markets, Baker said. But there is likely to be a substantial group of homeowners that will put some dollars into their homes anyway, if they have the money to spend.
Those who are following through with remodeling plans are saying, “Based on everything out there, I’m going to hunker down and make the best of my current living conditions,” said Craig Smith, chief executive of ServiceMagic, a company that connects homeowners to prescreened service professionals through the Internet.
In general, people are keeping their remodeling projects modest, said Mark Richardson, president of Bethesda-based Case Design/Remodeling and Case Handyman.
“In the boom times, three years ago, when there was more of an abundance of appreciation and consumer confidence . . . you might have expanded your dining room, made it a little bigger,” he said. “Today, maybe you’re putting in crown molding, recessed lights or putting in a bay window.”
The company is also noticing an increase in feasibility studies and design contracts, while actual construction contracts are slightly down, Richardson said. Maybe consumers are not taking action, but they’re “testing the waters,” planning their projects, attending home-improvement seminars and reading books about remodeling, he said.
“A lot of people are saying, ‘Let me think about it,’ ” he said. “If all of a sudden we move into the spring and there’s an uptick in consumer confidence, they will flip the switch and go.”
Market conditions are definitely playing into consumers’ remodeling reluctance. According to the spring 2008 remodeling sentiment report from RemodelEstimates.com, 92 percent of the 5,000 homeowners surveyed said falling home prices were affecting their remodeling plans. The cost of remodeling is their greatest concern.
To save money, 64 percent said they would do some of the remodeling themselves, and 33 percent said they wouldn’t hire a general contractor, according to the survey.
While there is a lot of uncertainty in housing markets right now, that doesn’t mean a homeowner has to sit on the sidelines, said Dan Fritschen, founder of RemodelEstimates.com and RemodelOrMove.com.
“It’s not a better or worse time to move,” he said. Your home may only attract a low price right now, but “the house you want to buy has depreciated, too,” he said.
Seems simple enough, but homeowners often have trouble accepting that their homes could sell for less, Baker said.
“I’ve heard from a lot of builders that households will come in and negotiate aggressively,” he said. “But then when the household isn’t willing to be as aggressive on the sale side of the [current] home . . . that apparently jinxed a lot of deals.”
It’s also not a bad time to remodel, Fritschen said. There is an available labor pool to do the work, given the slowdown in home construction, he said. And some people, frustrated with the volatility in the stock market, might decide an investment in their home is a better way to go.
Fritschen said that homeowners should consider both financial and emotional aspects when they’re trying to decide whether to remodel or move — regardless of market conditions.
Financially, calculate the cost of moving expenses, real estate agent commissions and difference in property taxes — everything that goes along with moving. Then weigh those expenses against remodeling estimates, he said.
Think about other benefits of moving or staying, including quality of school districts or commute time, he said. And factor in the inconveniences of both options, whether it is boxing up everything you own or living in a dusty home while it’s being remodeled.
If you choose to remodel, think about what the project will do for the home at resale, Fritschen said. It’s especially important to pay attention to how it stacks up against others in the neighborhood.
“Be aware of how much the home will appreciate — or depreciate — based on the remodel,” Fritschen said. You may want a huge gourmet kitchen, but if that isn’t the standard for the area, the improvement could be a waste of money.
A calculator that walks consumers through the remodel-or-move decision can also be found at RemodelOrMove.com.
