Is it finally time to add “build an outdoor kitchen” to your honey-do list?
According to the Wall Street Journal, homeowners across the country are doing exactly that:
“After years of shelving projects and doing only improvements deemed absolutely necessary, more homeowners are dusting off their remodeling plans this year as they grow more hopeful about the economy.
[...] Remodeling expenditures are forecast to rise at an inflation-adjusted annual average of 3.5% between 2010 and 2015, according to a recent report from Harvard’s Joint Center. The estimate includes home-improvement spending, but not money spent on home maintenance and repairs. The report predicts a long-term recovery for an industry that experienced a double-digit decline from its peak in 2007.”
Here are just a few reasons why:
It’s an Alternative to Selling
As we’ve discussed a few times here at Texas Lending Today, one major problem prolonging the housing market slump is the giant glut of unsold houses out there. It’s a catch-22 that even the freest markets are prone to from time to time—no one wants to sell until prices improve, but prices won’t improve until people start selling.
So many homeowners who have simply gotten sick of waiting—but who aren’t going to settle for a poor selling price—are turning to remodels or renovations either as a way to improve their long-term housing investment, or to simply better enjoy where they’re living in lieu of selling.
According to Angie Hicks of Angie’s List, in a strong housing market, people are more likely to move when their home no longer fits their needs. In a rough market where it’s tough to sell, it makes more sense to just improve the house they’re already in.
Furthermore, improvements—especially in curb appeal—will help the house stand out from the unsold masses.
The Broader Economy Affects Remodels
Yes, we’re not out of the woods yet with this recession. But there are real signs of a slow and steady recovery. And in the remodel industry, a little bit of stability and optimism can go a long way.
Studies show that a big chunk of remodeling spending happens either as a way to boost the values of soon-to-be-sold homes, or to customize a newly purchased home. An improved economy and housing market benefits both of these trends.
Furthermore, in the panic economic environment of the past couple years, many folks were simply putting off major home remodeling projects until it became a bit easier to predict the future. Renewed (even if tepid) optimism about a robust economic recovery means it’s just time to finally get to the things on their to-do lists.
It’s a Buyer’s Market
More than anything, it’s simply a buyer’s market right now in the remodeling industry. The ongoing construction industry slump means lots of contractors have been retooling their businesses to focus on home remodels, rather than new home construction. And even as the economy stabilizes, homeowners are going to remain much more cautious about overspending than they were before the crash.
The numbers back this up—according to a study compiled by Angie’s List, nearly 80 percent of the 554 home-improvement contracts surveyed said they were dropping prices by as much as 20 percent in order to win bids.
Naturally, as demand for remodeling contractors increases (alongside a more general construction recovery), these discounts will begin to disappear. So if you’re considering investing in your home through a renovation, give one of our Dallas home improvement loan experts a call. At Texas Lending, we have all sorts of home improvement loans that can help get your projects rolling.