As the market for buying and selling homes continues to slump, homeowners are turning to remodeling projects in record numbers to create better living spaces. According to the BuildFax Remodeling Index (BFRI), remodeling activity climbed 40% this October over last year, and the trend seems likely to continue.
The BuildFax information is derived from the construction permits filed with local building departments all across the country. However, since many simple remodeling projects inside a house may not be filed with the city, the data cannot account for those numbers. This, in turn, means that there could be even more projects happening that are unrecorded.
With the housing market struggling so much, many homeowners who would have previously sold their homes and moved are now looking at other options. Either they would lose too much money on the sale, or they are not in a position where they can get financing for another home. This has also led to a trend in remodeling toward “comfort projects” rather than “value projects,” suggesting that where once people were looking at the kind of remodels that would increase the value of the home to flip it and make some money they are now looking for ways to make the space more livable and enjoyable.
However, it appears that the economy has not reached the point where homeowners feel comfortable with major projects, like adding on another wing or building a large deck for a hot tub. The comfort projects these homeowners are undertaking tend toward simpler things, such as putting backsplash tile in the kitchen, redoing the bathroom, and adding energy efficient windows.
Because of this trend, the total value of the work does not seem to be as high as it was during the housing boom. While the average major projects costs were about $43,808 in 2004, they are hovering around $39,460 in 2011. The same can be seen in the more minor projects which dropped from $12,623 in 2006 to $10,968 in 2011. So while more home owners are looking to add glass tile to their bathroom or granite countertops to their kitchen, they are keeping the projects smaller and more manageable, which is probably a response to the troubled economy.
According to the BFRI, home remodels have had year-over-year growth for the last 24 straight months, but there are others who question how long it will last. With the continued slump in the housing market, there will still be a lot of hesitation to invest in a home when they believe it will only lose value for the foreseeable future. At the moment, though, the number of people looking at other options to improve their living conditions without selling their house continues to climb.