Browse the article How can I renovate in a recession?
You would think a bad economy would be the wrong time to renovate, but it actually may be the perfect time to find the best deals. See more home design pictures.
In recent years, many homeowners bought what should have been their starter home. They would stay in it a while to let it gain some value and then sell it for a profit and trade up to their "forever" home. Sometimes the starter home got a few upgrades to improve the value. Other times, it was left as is. But the bursting of the real estate bubble in 2007 and 2008 put a lot of homeowners in a bind. All of a sudden, it was no longer possible to sell to the highest bidder for a big profit.
During the boom, contractors and builders had their hands full with new construction. During the downturn, however, demand decreased, home loans dried up and builders found themselves with a surplus of empty homes. The Joint Center for Housing Studies at Harvard University indicated that spending on home improvement peaked in 2006 and fell during each quarter after this. The center estimates that by the third quarter of 2009, there will be an annual decline of 12.1 percent in home renovations [source: Harvard].
One result of the housing mess is people are staying in their houses longer. With contractors out of work and materials dropping in prices, a recession is a pretty good time to renovate that starter home, as long as the project will add good value for minimum investment. Tackling a few fix-up jobs around your house allows you to enjoy it more until the market picks back up and adds value to your home in the process.
Why Renovate in a Recession?
When times are tight, travel and recreation expenses are usually the first to go in the family budget. This has prompted a new type of vacation, aptly titled the staycation. This is when you take off work and vacation at home instead of hitting the oceanfront rental. This is a great opportunity to beautify your biggest asset: your house. Not only will this provide enjoyment for your family, but it will also pay off when you decide to sell.
Another good reason to renovate during a recession is because of the availability of good contractors. If you were trying to get a construction project done during the housing boom, your contractor of choice may have not been available within your timeline. But in 2008, new construction work took a sharp decline, and contractors with the six-month waiting lists suddenly became more available. The bad contractors are generally weeded out as well once things slow down, so your chances of getting a quality crew goes up when times are tough. And since supply outweighs demand, sought-after contractors offer more competitive rates to get work and keep their crews busy.
The do-it-yourself (DIY) route is another great way to go in a recession. Most of the costs associated with contractor budgets are labor hours, so if you opt to take on projects yourself, you stand to save a lot of money. Couple that with the fact that building materials are marked down in a recession and a DIY-er can save even more. Keep an eye out for sales at your local building supplier.
If you can't go all out for a renovation, there are some inexpensive upgrades you can make.
Painting is the cheapest way to make a dramatic difference to a room. A gallon of paint costs less than a meal out and can be enjoyed for much longer. A fresh coat of a cool blue over that drab beige in your living room can transform the mood of the room immediately. Make sure that the paint colors you choose in each room complement the overall aesthetic of your home.
While a full landscaping project may not be in the budget, planting flowers is a great quick fix to perk up the exterior of your house. You can buy small packs of annuals early in the season for considerably less than full-grown plants. Bulbs are also inexpensive and easy to care for, and many come back year after year, providing delightful ranges of color. And if you want to be really thrifty, you can start seeds early in the season and transplant them to your yard once the weather warms up.
Bathroom redos are big right now because they're one of the main things that buyers look for when purchasing a house. So, if you have an out-of-date bathroom, you can make several inexpensive improvements to get it up to the times. Updating your tile is affordable, and this is usually a project that a novice renovator can complete with success. New vanities can be expensive, so you might want to consider retrofitting an old nightstand or dresser with a sink. This kind of customization is highly desirable to buyers and kind to your wallet.
Kitchens are another hot ticket for buyers. Replacing cabinets is a huge job, but refacing or painting them is a great way to make a splash without breaking the bank. If you do want to replace your cabinets, you might want to consider open shelving, which is all the rage in design magazines and considerably less expensive than new cabinets. Replacing the hardware and drawer pulls is a great way to alter the look for little money. Granite countertops are highly desirable in kitchens these days, but they can cost a lot. But installing granite tiles with a complementary grout color can provide a custom countertop.
If you're ready to begin the work to upgrade your home, see some links on the next page that can also help with your project.