» Subscribe Today!
More of what you want to know.
The Daily News

Forgot your password?
TDN Services
Research millions of people and properties [+]
Monitor any person, property or company [+]

Skip Navigation LinksHome >
VOL. 113 | NO. 108 | Tuesday, June 1, 1999

Print | Front Page | Email this story | Comments ()
By LAURIE JOHNSON Record-breaking remodeling U.S. homeowners are expected to shell out a record $125.9 billion maybe more to remodel and expand their homes in 1999 By LAURIE JOHNSON The Daily News Drive down almost any street in an established area of town, and remodeling contractors signs, as well as the sounds of saws and hammers, may seem as prevalent as summer flowers and crickets. U.S. homeowners are expected to spend a record $125.9 billion to remodel their homes in 1999, a 2.5 increase over last year, according to National Association of Home Builders' forecasts. In addition, first quarter market indicators already point to an even stronger year of growth for the remodeling sector than expected, NAHB officials said. "Were expecting our industry to have a very busy year," said Jennifer Daw, spokesperson for the NAHBs Remodelers Council. The NAHB bases its forecast on an anticipated slowdown in new housing starts and sales during 1999, as well as rising home improvement costs, Daw said. Final figures for 1998 could reach $125.6 billion, a 4 percent increase over the previous years renovation spending. According to the NAHBs Remodeling Market and Remodeling Activity indices, compiled by the Harvard Joint Center for Housing Studies, the home improvement sector could reap a record $130 billion in 1999, provided the U.S. economy holds steady. "Were having a banner year," said Rob Carr, president of River City Builders Inc. and this years chairman of the Memphis Area Home Builders Associations Remodelers Council. "Ive been in this business for almost 20 years, and Im having, so far, the best year Ive ever had." Todays healthy demand for existing homes is one element boosting the home improvement sector, said NAHB Remodelers Council spokesman Bryan Patchan. During the last six months, existing home sales have outpaced the typical 5 million annual rate, he said. A recently published study by the Harvard Joint Center found that home buyers spend an average of about $2,000 more on renovations within the first two years of moving into a new home than in subsequent years. Homeowners also are more inclined to remodel when the values of their homes are rising at faster rates, Patchan said. Today, appreciation in housing values is on an upswing, he said. Carr said the demand for remodeling jobs in Memphis is being fueled by the fact that fewer intermediate-priced homes are being built, and many Memphians living in established neighborhoods near the center of town are choosing to stay there rather than move to the citys outskirts or the county. "It seems like most of the homes being built today are either in the low $100,000s or $300,000 or more," he said. "So, in some of the areas in Germantown that have the 20-year and older homes that are in good school districts and close to churches the kinds of things that middle-aged people with children are looking for people are finding they can spend $30,000 to $50,000 on an addition that basically gives them the amount of space they could get in a $400,000 home. "In my experience, the situation with most of my clients is they like where they are, they need more space, their familys grown, but they dont want to move." In addition to Germantown, other popular areas for home remodeling in Memphis include sections of the city east of Goodlett Road, mainly between Goodlett and Interstate 240, and in neighborhoods between Park Avenue and Yates Street. "You drive down any of those streets where some of the nicer homes are and where the property values have gone up dramatically, and youll see a lot of work going on." In addition to more projects on their schedules, remodeling contractors also are faced with increases in remodeling costs, such as labor and materials. According to a survey of remodelers conducted by the NAHB last fall, 73 percent reported higher costs than in the previous year. In 1998, the survey found, the median price of the typical remodeling job was $22,000 and the average price was $39,000, compared to $18,000 and $25,000, respectively, in 1997. From the contractors perspective, new additions can be more difficult to build than a new house, Carr said. "Youre in a retro-fit situation," he said. "You have this existing structure and a client whos saying We want a new room, but we dont want it to look added.' " While the NAHB survey found kitchens and bathrooms to be the nations top remodeling requests, followed by room additions, Carr said he found the opposite seemed to be true. He said sunrooms and family rooms were his most popular requests, followed closely by additional master bedroom and bathroom suites. "People want to have their formal living rooms, but they also want to have a big gathering room where they can hang out at the end of the day," he said. This is a departure from new home plans popular for the past 10 years or so, which reflected an "open feel," with all the common areas flowing together. "Its almost like people are now wanting to have a room for themselves and a room for the kids," he said. "They want to be able to close things off, so the kids can have their friends in and be over in one room playing Nintendo, and the adults can be in another listening to Mozart or whatever." Growing families, particularly those with teenagers taking over any and all available bathroom space, seem to be the main factor driving many parents to invest in new master bedroom and bath suites, Carr said. Despite a progressive decline in the size of the average U.S. household, homeowners persist in demanding more living and storage space, Patchan said. According to the NAHB, the typical home built in the 1950s had less than 1,500 square feet of finished space. By the 1980s, the median new home size was about 1,650 square feet. Homes being built today have a median of 1,975 square feet, with more bathrooms, larger garages, more fireplaces and more amenities once found only in luxury homes than ever before. "People just want more space. They need more space," Carr said. "Theyre finding they can add a room for just about the amount of money it takes to close on a new home and make the move. "In almost every instance where Im doing an addition and the people have looked into moving, they say, We can spend 50 grand here and still have half the house note wed have if we did move, and we still wouldnt really have that much more house if we did move." With more than 118 million existing housing units and the age of the average U.S. home approaching 30, the remodeling industry is expected to garner an even larger share of the U.S. residential building market in the future, possibly surpassing new home construction in dollar volume by 2010, NAHB officials said. Carr cautioned, however, that in the remodeling industry, as with any other growing and profitable industry, its important to be very choosy in selecting a contractor. "The remodeling industry is big business," he said. "Where theres big business, theres scam artists. Theyre going to come out of the woodwork." He also said going with the cheapest bid isnt always the wisest move a homeowner can make. "You get what you pay for," he said. "The guy whos not licensed is generally going to be cheaper, and in many cases, hes not going to do the best job." To locate a contractor with a proven track record, Carr suggests contacting the MAHBA and its Remodelers Council, which maintains a listing of member remodeling contractors and provides tips when looking for someone to do a home remodeling project. "We will be delighted, even if they dont select a contractor from our list, to give them any information they need to go about selecting the right contractor. "But, no matter where they find their contractor, whether its through us, the yellow pages or through a reference, the thing to remember is this: Check the guy out. Go look at some of his work and talk to his past customers," he said. "Really do your homework."
MORTGAGES 54 374 1,120
BUILDING PERMITS 177 767 2,425