Why homeowners are staying put
Renovation projects becoming increasingly popular amid housing-market woes.
When Travis Slocum and his partner contemplated selling their Washington, D.C., home this spring, they had high hopes of upgrading to a larger place. After all, in recent months, nationwide news has underscored falling home prices and historically low mortgage rates, both boons for would-be homebuyers.
But Slocum found the selection disappointing. "We really didn't find anything on the market that wowed us," says the 34-year-old banker. "(Some) might have had more space, but they weren't as updated, or they were well out of our price range."
Despite what some housing experts say is the best buyers market in years, house hunters like Slocum are finding themselves discouraged by tighter lending standards and the challenge of selling existing properties. Rather than purchasing a new home, some would-be buyers are considering other options. For example, Slocum and his partner, who own a two-bedroom, two-bathroom home, are considering adding on to their existing property, remodeling or even finishing their basement to create a separate rental unit and another source of income.
Jay and Stephanie Herbert opted to refresh the exterior of their Alpharetta, Ga., home instead of moving, adding Craftsman-style touches such as stacked stone columns and shaker shingles.
"That's really what's making us stay in this house," says Stephanie Herbert, a 36-year-old homemaker. "If we could stay here and have our house paid off when our kids hit high school, it would be great to not have to worry about the burden if my husband were to lose his job."
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"People don't want to sell now because the market is so depressed," says Mitch Hochberg, principal at New York City-based Madden Real Estate Ventures. "They feel the smarter investment would be to put money into their current house that they will hopefully be able to recover when the market turns around."
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If you're a discouraged house hunter looking for alternatives, here are a few ways you can adapt your current home to meet your needs:
Room conversions: Whether you're converting a bedroom into a home office or turning a recreation room into an in-law suite, simply repurposing your living space can be one of the most affordable ways to adapt your home to a change in lifestyle needs.
Remodels: High-traffic areas such as kitchens and bathrooms take a beating over the years. The good news is that, on average, homeowners recoup 73% of what they spend on a minor kitchen remodel and 64% for a bathroom remodel, according to the most recent Remodeling Cost vs. Value Report. On average, minor kitchen remodels cost about $22,000, while bathroom remodels will set homeowners back about $16,000.
"People are absolutely spending more in renovating and expanding their existing homes rather than making the more significant investment of buying a new home," Hochberg says. "Someone may be living in an older house and may want to put in a new kitchen or bathroom because that was one of the main drivers for moving."
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Finishing basements: Although this is one of the more pricey upgrades — on average, finishing a basement costs almost $65,000 — finished basements can add extra living space for families feeling cramped in their current homes.
"It's a fairly easy one to do," Hochberg says. "You don't have to deal with foundations and the roof."
Exterior face lifts: Some homeowners are choosing to improve the curb appeal of their homes. While the Herberts undertook a more complex project to refresh the exterior of their home, simply replacing the front door or even a garage door can spruce up a tired-looking façade. A new garage door costs about $1,300, on average, but homeowners can expect an almost 84% return on their investment. Entry doors return a whopping 102% on average.
Additions: Major construction projects can be pricey, but if homeowners plan on remaining in their house for a while, they can recoup almost two-thirds of what they spend, on average. Popular additions include sunrooms and outdoor living spaces such as decks and pergolas, says Jannis Vann, a residence designer in the Atlanta metro area. Clients are also expanding in-law suites, she says.
But while some renovation choices might be right for certain markets, the same upgrades might not fetch the same return in other markets.
"Really know what kind of neighborhood you're in. If only one in 10 homes have granite counters, you don't need to install granite counters," Shuman says. "You really need to understand what you're putting into the renovations you do."
Let's see, the ecomony is in the toilet, unemployment is high, values have crashed and even if you want to buy another house, good luck finding a bank willing to loan you the money.
What planet are you people living on?
The last time I renovated my bathroom it cost me less that $1000, and I set it up as handicapped accessible, I knew I was losing my ability to walk. My home is set up HP accessible.
The very last thing I would do is worry about what amenities the neighbors built into their homes. We arranged our home to suit us and only us. I will die here and if someone wants to put a match to this place after I die, I really won't care. During my life we have owned several homes, I left them better than I bought them. Made money when I sold them when we relocated.
Every renovation does not have to be done immediately, do one thing at a time, do it well. Then move on to the next thing, I paid for everything out of my back pocket, no bank required. If you live in a location where pulling building permits will not allow you to financially operate economically, then you live in the wrong place, and you should move. I have no allegiance to any particular community or location, never have had.
When looking for a new home in a new location, you look at the schools, well you should also look at the local building codes, as well as the zoning laws.