Turnaround in demand for significant home-improvement projects, but will they pay off?
If you’re ready to go ahead with that new deck or seriously considering a kitchen overhaul, you are not alone.
Home-improvement projects – especially the more significant upgrades – are rising again, according to local remodelers.
Debra Speck has noticed the increase at Jade Enterprises, the Albuquerque remodeling firm she owns with her husband, Jeff. Though the business hasn’t seen a return to its pre-recession boom years, Speck said the scope of the work has changed.
Whereas her firm’s projects averaged $20,000-$50,000 two years ago, the figure has crept back up to about $75,000.
Homeowners are “not just calling us to patch their roof and install a window,” she said. “They’re calling us again for those kitchen and bathroom remodels.
“That is huge to us.”
Home remodeling permits filed with the City of Albuquerque climbed 9.3 percent from fiscal year 2010 to 2011 and made another year-over-year gain of 5.9 percent in 2012. The dollar value of those permits increased 12.9 percent from 2010 to 2011 and 7.6 percent in 2012.
Permit valuations for the current fiscal year are trending downward, but Jaime Baxter, chair of the Home Builders Association of Central New Mexico’s Remodelers Council, said members are reporting more consistent work.
Business has “absolutely picked up,” she said, noting that the cost and size of the projects at her family’s company, Bain Cochran Construction, has doubled from four years ago.
At the height of the recession, she said, customers considering projects often walked away due to financial constraints. Baxter said that local remodelers have in the last six months finally started seeing an increase in customers ready to commit to jobs, especially larger projects like the kitchen and bathroom remodels.
“We’re seeing a consistency of people wanting to have work done and who are in a position to make it happen,” she said.
Nationwide, home-improvement spending is projected to make year-over-year gains through the rest of 2013 with the third and fourth quarter up nearly 20 percent from 2012 levels, according to the Joint Center for Housing Studies of Harvard University.
The center’s Leading Indicator of Remodeling Activity report cited several factors expected to drive continued growth, including necessary upgrades to the number of “distressed” homes sold during the recession, higher demand for green home updates and baby boomers making modifications so they can age in place.
Baxter said there’s already increasing interest in such “age-in-place” work, which goes way beyond widening doorways.
“It’s about what kind of plumbing fixtures you have, what kind of lighting, what’s the access in and out of your home,” Baxter said. “There’s quite a bit that goes into it.”
Jim Folkman, executive vice president of the local homebuilders group HBA, said permits for remodeling have now outpaced those for new single-family home construction. In the wider Albuquerque metropolitan statistical area, remodeling accounted for 22 percent of permits in 2005. Remodeling represented more than half of permits each of the past three years. It was 63.1 percent in 2011, a year that single-family housing permits in the area dipped to the lowest level since the association has been tracking.
Where to put your money
If you’re looking to get the most bang for your buck, there are certain home-improvement projects that may retain the most value at a home’s resale.
According to the Remodeling 2013 Cost vs. Value Report (the complete report is available for free download at www.costvsvalue.com), a wood window replacement offers the best return on investment in Albuquerque. The average cost of such a project (assuming 10 windows) is $10,433, with an average of $8,444 (or 80.9 percent) recouped at resale.
A minor kitchen remodel ($17,737 with 72 percent recouped) is also among the better investments in Albuquerque, according to the report.
Among the least expensive projects that retain the most value is a garage door replacement ($1,450 and 65.8 percent recouped), the report found.
While some clients choose to remodel with resale in mind, Baxter said most of her firm’s clients right now are making changes for their own happiness and comfort.
“It’s definitely still a mixture, but the majority of folks that we’re coming across at this point are people who want to be in their homes,” she said.