Thursday, July 16, 2009

Home Remodeling in a Weak Economy

Over the years, I've talked to thousands of homeowners considering a remodeling project. They are at a decision point. The questions are often similar, often complex, and always cover many facets of life. One of the biggest issues is economics, and the five most common questions on that front are:

1. What do we need?
2. What do we want?
3. What will it cost?
4. What will it be worth?
5. What should we do?

The Big Shift

The way people answer these questions is changing along with the changes in the housing market and economy. Does this mean people won't remodel? No. In fact, I think it means more people will remodel (since less will be building new homes!).

Merge the economic factor with the Green Movement and you get some pretty interesting changes in the answers to these five questions.

What do we need?

Old answer: "More space, more storage, more garage bays...MORE!"

New answer: "Better use of the space we have; better storage, creative solutions, well designed nooks-and-crannies, better flow...BETTER!"

Areas like a small home office are going to be a big part of the future. Not only do people want to make better use of less space, but the trend toward working from home marches on. Home offices are a great place to get creative with design. You can use built-ins to take advantage of even the smallest areas of open space.

What do we want?

Old answer: see "MORE" response above. People haven't always been all that interested in trying to differentiate between wants and needs.

New answer: "We want to create an environment that has great design and feels great to be in! We want to eliminate clutter without giving up amenities. We want to live in a space that speaks to who we are and what we love. We want to vacation in our own home!"

American homeowners are willing to give up some space, but they aren't at all interested in giving up quality!

Words like environment, design, and feel weren't a big part of the ideas of ten years ago. At least not for the masses. That's different now.

The growth of places like Starbucks and Panera show that people want to be surrounded by a thoughtful design.

What will it cost?

Old answer (homeowner): "As long as I can refinance and the cost will be less than $____ per month, let's do it!"

Old answer (contractor): "It's not going to be cheap!"

New answer (homeowner): "It can't cost more than $________ because that's how much cash I have to put into this."

New answer (contractor): "It's not going to be cheap, but it will cost less than it would have last year, and I am willing to work creatively to get you more for your money."

Times have changed, though surprisingly the cost contractors pay to get work done really hasn't changed much. Amazingly, all the price increases attributed to the high price of fuel remain exactly as they were. Labor rates haven't dropped and workers don't work faster.

But budgets have changed. People have less to spend or at least less they are willing to spend. It will be interesting to see how these forces meet. I think we'll see an increase in people going the D.I.Y. route.

What people must be careful of in a time like this is to NOT hire unlicensed contractors or worse! Even a complete beginner would wish they had just done the job themselves if they end up in a serious mess as a result of bringing in the wrong help to save a buck.

What will it be worth?

Old answer: "It's gonna be worth at least __% more than I pay for it!"

New answer: "Unless I buy this extremely well, it's going to take at least ___ years before I can get my money back."

This does not mean people won't remodel. It just means that they will remodel for themselves, for what they want and need, not for some future, "maybe, maybe-not" ROI.

What should we DO?

My answer: Create a retreat; make an environment that makes you feel amazing when you're home. Be sure it encompasses both indoors and out. Don't let economic worries or budget concerns stop you from making the most of the place where you spend so much of your life.

Whatever the budget, there is a solution. Especially if you're willing to do a little research and get your hands dirty!

Tim Layton

Remodeling Guy

Visit The Remodeling Guy Blog - Helping you build your dream, without losing your mind, your money, or your marriage!

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