- The Washington Times - Friday, May 29, 2009

Drive around the neighborhoods of the greater Washington area and you may literally see more signs of economic recovery. Bright yard signs announcing a new roof, windows or an addition used to be ubiquitous just a few years ago. The signs, along with the remodeling jobs, are few and far between these days.

According to the latest National Association of Home Builders’ (NAHB) Remodeling Market Index (RMI), the residential remodeling market showed signs of improvement during the first quarter of 2009, although the numbers still indicate that the majority of remodelers view market conditions as less than favorable.

“Conditions remain below average and are down slightly from this time last year,” says David Crowe, NAHB chief economist and senior vice president. “The gains over the last quarter and improvement in market expectations suggest a spark to the start of recovery in the remodeling market.”

If you’re trying to sell a home, it may be a good time to make some improvements.

“When you’ve got lots of similar houses for sale,” says Gopal Ahluwalia, NAHB vice president for research, “the one with new siding will be the one that stands out. It’s no guarantee - but curb appeal is definitely a factor, given the state of the housing market.”

Things were certainly better for remodelers during the housing boom, but the remodeling market is actually doing better than the housing market now. According to the National Association of Realtors (NAR), the overall housing market declined 7 percent in the past year while the home-remodeling market dipped just 3.86 percent between 2007 and 2008.

Meanwhile, Remodeling magazine’s 2008 “Cost vs. Value Report,” produced in conjunction with NAR, found that homeowners can recoup value from their home-improvement investments. The report estimates the percentage of investment homeowners can expect to recoup for a variety of different projects, from using fiber cement siding (86.7 percent) to adding a home office (54.6 percent).

On average, homeowners can expect to recoup a little more than 67 percent of their investment. That’s down from recouping an average of nearly 87 percent of the investment during the height of the housing boom, but it is still an indication that an improved home is better than one with no improvements at all.

Still, experts caution that any home improvement should be done with an eye toward improving lifestyle - not necessarily for improving market value.

“These days, home improvement as investment is a secondary factor,” says Walter Molony, an NAR spokesperson. “Most are lifestyle improvements.”

Josh Rosenthal of Rosenthal Homes in Potomac agrees.

“People are more focused on basic living spaces these days,” says Mr. Rosenthal. “They’re looking to improve bedrooms, baths, kitchens and family rooms. They’re not really as interested in the home theaters and ‘fun spaces’ that they were a few years ago.”

In other words, create the home you want to live in, not the one you expect to sell for the most profit. Remodeling contractors have less to do these days, so they may be more than willing to bargain or take on a project they would have been reluctant to accept in 2005.

“Our job size has decreased,” says Chris Landis of Landis Construction Corp. and Landis Group Architects, a Takoma Park-based design-and-build firm formed in 1990. “We’ve gone from an average $225,000 job to about $150,000.”

With homeowners spending less and having a harder time getting financing, many remodeling companies looking to remain in business are accepting small projects or adding handyman divisions that focus on jobs like fixing faucets, recaulking tubs and showers, adjusting hinges and changing windows.

“We’ve started a small-projects division,” says Mr. Landis, whose business has also added more services and expanded into Northern Virginia. “Any company experiencing this downturn needs to modify its business in order to survive.”

Today’s homeowners aren’t looking for dramatic transformations or to spend conspicuously, even when they can afford it.

“A lot of the projects we do are higher-end,” says Mr. Rosenthal. “But even if they can afford it, our customers are less likely to buy that $10,000 stone countertop.”

What characterizes many home-remodeling projects these days is what homeowners need versus what they want.

“There are really two kinds of home-remodeling projects,” says Mr. Ahluwalia. “There’s the ‘my roof is leaking’ project and the ‘I don’t like my kitchen or bathroom’ project. These days, about 50 percent of projects can’t be postponed any longer.”

What projects are most likely to return value?

Exterior projects like siding, window replacements and decks - things practically guaranteed to enhance curb appeal - add the most value, according to the “Cost vs. Value Report.”

“The best returns are cosmetic,” says Mr. Molony.

What are the most popular remodeling projects? Kitchens and baths are popular because these are the rooms that can make a home look “dated.”

“Everyone wants to have a fancy kitchen - whether you are cooking or not,” says Mr. Ahluwalia. “The kitchen has become more than a cooking place.”

Adding a bath is popular because few homeowners are content with - or are able to sell - homes that have just one bath.

Yet homeowners don’t want to spend a lot of time taking care of their new rooms.

“People want maintenance-free countertops and floors,” says Mr. Ahluwalia.

Mr. Landis notes that a number of his clients have made modifications to allow them to age in place in their homes or provide accommodations for an aging parent.

“They need an added suite or basement remodel,” he says. “Often, it’s the parent who pays for the work, and the homeowner gets the added value to the home.”

Mr. Rosenthal has also seen more of these types of remodeling projects.

“Whether it’s due to market conditions or the love of the house, adapting your home for the next 10, 20 or 30 years is a good investment,” says Mr. Rosenthal. “Given the expense of real estate, more and more people are looking to stay in their homes [longer].”

Today’s home remodelers are also interested in energy efficiency, especially with rising fuel costs. Energy Star appliances, spray-foam insulation and efficient heating and air conditioning systems are all on the minds of today’s environmentally conscious homeowners.

“Consumers are concerned with the rising cost of energy,” says Mr. Ahluwalia. “And people are more health-conscious than they used to be [when it comes to what goes into their homes].”

Remodelers interested in the environment often use green items such as local lumber and low volatile-organic-compound paint.

Green items were seen as “specialty materials” just a few years back but are being used in standard practice by many remodelers.

“We provide green things as a basic package,” says Mr. Landis.

Finally, NAHB notes an added benefit in the form of tax credits for energy-efficient home improvements, part of the new economic stimulus package that provides financial incentives for homeowners to go green on their renovation projects in 2009 and 2010.

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