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Homeowners expected to spend more on remodeling
By Amy Hoak, MarketWatch
A 20-year-old house in suburban Atlanta is getting a makeover to create a
more open floor plan for its kitchen, dining room and living room. The
homeowners had wanted to make the improvements for a while, but because
they purchased the home when prices were at peak levels, their plans
were shelved.
Until now.
“The rebounding economy gave us the confidence to invest in our property
— even though it is still worth less than what we paid, at peak,” said
Jeffrey Ulrich, who lives there with his wife and three children. “At
the same time, we have no intention of going anywhere else. This is our
home, and we made a decision to invest in our everyday living, and think
it will pay dividends now and in the future.”
Researchers at Harvard University’s Joint Center for Housing Studies
think there will a fresh crop of homeowners like Ulrich, finally going
forward with postponed remodeling plans in 2014. In fact, they are
expecting 10% to 15% growth in remodeling spending through the third
quarter of this year, compared with the same period a year ago — which
would add up to a “very good year for the industry,” said Abbe Will, the
research analyst who puts together Harvard’s Leading Indicator of
Remodeling Activity. The projection is based on a wide variety of
housing data.
“Homeowners are starting to feel much more confident about the fact that
their homes are not just retaining value, but are starting to see
home-price increases in many markets,” Will said. To fund these
discretionary projects, there’s an improving environment for home-equity
lending; until just recently, home-equity loans and lines of credit
were nearly impossible to get.
Remodelers are getting more requests for kitchen and bath remodels, home
exterior improvements, changes to help homeowners age in place — even
additions, said Tom O’Grady, chairman of the National Association of the
Remodeling Industry’s strategic planning and research committee, as
well as president of O’Grady Builders, based in Drexel Hill, Pa.
The increased demand had many remodelers entering 2014 with jobs in the
pipeline, something that hasn’t happened for years, he said. Remodeling
activity started slowing back in 2006, O’Grady added.
Renovation of distressed properties is also helping fuel the remodeling
industry, as owners invest money into foreclosures and short sales that
have been neglected over the years, Will said.
Before you remodel
If you’re planning a remodel of your own, consider the following before
hiring a contractor. It will make for a smoother process, and ensure
you’re getting the most for your money.
Collect ideas:
Go online to get ideas, and share pictures that you like with your
contractor, Ulrich said. That will help you communicate your desires,
and will make it easier for the contractor to quote jobs. “It puts
everyone on the same page from the beginning,” he said.
Set a budget:
For yourself, set a maximum budget and make sure you have a contingency
for any splurges you may want to make or problems that you could run
into, said Liza Hausman, vice president of community for Houzz.com, a
home remodeling and design website. Then, create a goal budget to share
with your contractor. As much as you can, research materials to
understand what they’ll cost. That will help you understand whether your
budget is realistic.
Take a breath:
Don’t rush into major remodeling jobs if you’ve just moved in. “Live in
the home for a few years so you know what you want to fix,” Hausman
said. Only then will you understand how your house works — and what
really needs improving.
Research contractors:
Contractors should be licensed and insured. Read online reviews, but
make sure that the site you’re using allows both positive and negative
reviews (some only post the positive), Hausman said. Don’t forget to ask
for referrals from former clients, and reach out to them to find out
how they liked working with the contractor, she said.
Break down bids:
Bids should include detailed information on what everything should
cost, including materials and labor, Hausman said. But there can be wide
variations when it comes to material costs, she said. Find a contractor
who can “value engineer” your project and “help you find ways to pull
stuff out or do things in a creative way,” so you’re spending your money
in a smart way and getting elements that are the most important to you,
she said.
Trust your contractor:
Choose a contractor you trust, but also make sure that the person who
gets the job is a good communicator. That will go a long way to making
sure you’re happy with the final result. “We’ve heard plenty of horror
stories from friends,” Ulrich said. His contractor was good about
following up after the initial inquiry — and Ulrich took that as a good
sign.
Start with a small job:
Although he had a good feeling about the team doing the work, Ulrich
gave his contractor a smaller project, a bathroom remodel, first, before
hiring him to do his large-scale great room project. “How you’re
treated on a small project is going to be how you’re treated on the big
project,” he said. “They treated us like the most important customer
they had, and it showed.”
Prepare for inconveniences:
Workers will be in your home all day, and if you’re redoing a kitchen,
take-out dinners will become the norm. And then there’s the dust. But
remember that remodeling requires a spirit of adventure, Ulrich said.
“Take a deep breath and say ‘This is all going to turn out great, and
it’s a small price to pay for decades of enjoyment.’”
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