Home renovations in the U.S. are beginning to pick up. But according to the Federal Housing Authority, home improvement loans for single family homes are down almost 18 percent from this time last year. Both remodelers and analysts alike blame the banks for tightening their belts when it comes to lending money.
Abbe Will, a research analyst with the Remodeling Futures Program at the Joint Center for Housing Studies at Harvard blames the housing bubble that caused the economic crisis of 2008. “It used to be, during the boom, homeowners had all this equity in their home. House prices were rising quickly and they were able to easily tap into the equity in their home…and with the crash that did completely dry up.”
Cayenne Barnes has been a home remodeler in the Atlanta area for 25 years. Her company Pro-Interiors services both commercial and residential clients. Barnes says business is good, but agrees with Will that it’s changed dramatically since the housing bust. “The joke in the industry - both remodeling and building lately is - Oh, the banks have really opened the lending faucets up to a trickle.”
But for those who do get the loan or pay out of pocket for their remodel, Barnes offers these words of wisdom, “It’s important to love your space – and love living in it, regardless if you are looking at selling or staying after your re-model. If you are interested in selling your home in 6-12 months, ask a local realtor what they see in homes which are selling. Or, attend several open houses and listen for feedback. In the end, you want to make your money work for you and bring you comfort, convenience and possibly more money.”
Barnes gave Real Money her top tips for making the most out of remodeling your space.
Top 5 ways to add value:
1. Reconfigure your space to have fewer and larger rooms – more open space. Have room to entertain and a place for your family to be in the same space even if doing different tasks.
2. Quality work and products. The cheap materials still require expense to install. Pick a good, mid-grade, well-known product.
3. Invest in a master bath either by adding space onto the house or repurposing a lesser used bedroom to get the space. You need a walk-in shower and room to move. Not huge. But a reasonable space, 10'x12'.
4. Upgrade the things that are easy: doorknobs, lights, cabinet hardware; get rid of dated lights and hardware (on cabinets, doors, etc.). These small changes begin to create an updated look.
5. Be creative. Install a mirror where it may not necessarily go; kitchen, hall etc. Paint a fun color – especially if you want to sell it. Painting is not expensive, but if you are going to do something creative, use a professional. You can also add finishing touches, like a colorful rug or art piece. Take out the carpet. Spending a little money up front, will make you money in the long run. And part of that is reconfiguring your house. Don’t be afraid to change the traditional idea of the layout of a house, make it your own to fit your personality and the way you live.
What people may not know:
1. You should always have a written scope of work and price and understand it completely before you start construction. Enjoy learning the details. It will reward you in the end.
2. Transform your space to an energy efficient one, it could save you money in the long run. Remodeling and building have picked up, so prices for energy efficient materials have come down – yet gas hasn't. It would cost roughly $3500 to install and open cell foam insulation on the roof line of a 3-bedroom/2-bath house and you could re-coup those costs in 3-4 years from the money you save on your energy bill. Other ways to save money on your energy bill: stop the drafts. Install new window sashes, install door sweeps on the bottom of the door can save energy and use LED light bulbs.
3. You don’t have to spend as much money on the fixtures as you think. You can buy a brushed nickel faucet for a $100 now as opposed to a $500 European sleek design faucet.
4. There are some things that you can do yourself before you get started – such as selecting your products and materials that aren't as expensive – so make sure to educate yourself as much as possible before you get started.
5. Also, make sure to make as many decisions and purchases before you get started. Identify and purchase 80 percent of your materials before you tear out the first wall. Have the lights and plumbing bought because you don’t show up to a university and get a degree, you have to do some work. Put in some time before you let anyone tear anything out; that will cut weeks or months off of your remodel.
6. Don’t be afraid to ask your contractor to go with you to select materials – most do not charge, and it’s not unusual for every $10k you spend on your remodel, your contractor will spend 3-5 hours to help you choose quality products, but you have to ask.
7. If you want to reduce the price without reducing the scope of work, within reason - it doesn't hurt to ask. And offer to handle some of the lower skilled work yourself – shopping, running errands, cleaning up.
8. Shop wisely. Watch for sales, ask for discounts. Even big box retailers give discounts.
9. If you want to modernize your home and do not know what is in style or even what the choices are, invest in 3-4 popular design magazines and read. Or, go online and read about remodeling trends.
10. Develop a plan. Know why you are remodeling and what you want to accomplish. Your reason will guide you where to start. If your goal is for your home to function better for you and your family, look at reconfiguring it for the way you live. More light, open spaces, more amenities.