Combat Housing Downturns with Home Improvements
June 4th, 2008
Local news has been buzzing about one of the biggest new home builders closing up shop. It creates uneasy assumptions about the economy, the real estate market and our own personal security.
Reports confirm that St. Louis and Southern Illinois homeowners have been relatively insulated from dramatic housing market fluctuations because we never took part in over-inflated housing prices to begin with. So, the home you own now stands a very good chance of retaining all its value while the economy rights itself.
Now is the perfect time to take stock of your own house, and consider how to best shore up your own home equity investment. Here are some facts to mull over:
● Anticipated increases in house value lead residents to invest more in home improvements in order to capture future potential capital gains, as well as reallocating expenditures from nondurable to durable goods.
● On average in 2005, households whose homes had appreciated by at least 100% over the previous decade spent over 2.5 times more on improvements than those whose home values increased less than 50%.
● In 2005, owners of homes built before 1970 spent more than 17% of their total home improvement budget on energy efficiency related projects such as upgrading HVAC systems, adding insulation, and replacing siding, windows and exterior doors.
● About a third of owner-occupied homes are now at least 45 years old and an additional third is between 25-45 years old. This means that a large majority of homes are in increasing need of remodeling and repair.
Renovate your home only if you plan on staying for at least three years. A remodeling project should be all about you, not an unknown, imaginary buyer somewhere in the future. But it is smart to consider the future implications of the work you choose to do.
To find out if your project will add to the resale value of your home, take stock of other houses in your neighborhood. Have many of them been upgraded in the past few years? If your house is the only one around without a finished basement, that would be a good project to consider. If everyone on the block has added a bathroom or upgraded their master suite, these projects would pay off as well. On the other hand, you may not want to price your house out of the market by adding a third or fourth garage if that’s not the standard in your area.
There are two reasons to put yourself through a renovation:
#1. You want to love where you live.
#2. As economist Gopal Ahluwalia of the National Association of Home Builders explains, you must maintain your property or it will deteriorate.
You should redo kitchens and baths every 15 to 20 years to preserve the value of your investment. You may have to expand to accommodate changing lifestyles. Houses built in the 1960s had 1 1/2 baths, a small kitchen and no family room. Today’s new homes have three baths, great rooms and master bedrooms you can land a plane in. Mom and Dad may order in, but they want a kitchen where the whole family can sit down to eat. The price of not keeping your home up to date is that it may eventually sell for significantly less than others of the same size, or linger on the market for months.
But the most important consideration is you. Remodeling - as anyone who’s done it will tell you - is quite a lot to go through for anyone’s benefit but your own. In economically shaky times, you can do less, but do it properly. Be sure that you pay for quality work from trusted companies. A bad remodeling job can cramp your lifestyle and do little to boost your property value.
When you need a trusted and knowledgeable person to talk with about the improvements desired and work needed on your home, Mosby Building Arts is always here for you. Our Consultants will help you make a plan that encompasses both present and future needs; we’ll make sure you get value and quality for every investment you make in your home.
