Home Remodeling: Why It Makes Good Economic Sense

For the first five years of the 21st century, housing prices in America rose by more than half, making it easy to take out a loan to remodel or upgrade your castle. All of that changed when the real estate bubble burst several years ago, making loans harder to come by. However, with the decrease in construction, there are many contractors looking for work at reduced prices, so a home remodeling project now is cheaper than ever.

At the height of the building boom, most contractors were far too busy with big projects that cost hundreds of thousands of dollars to bother with small renovations. Now, however, they are contenting themselves with jobs that cost a fraction of that just to keep their companies afloat and the crew working. Banks are also eager to approve home equity loans for homeowners with proof of income, good credit scores, and equity of at least 20 percent, not to mention that interest rates for this type of loan have fallen significantly. With decreased contracting and building activity, the price of most construction material has dropped and the availability has risen, making the decision to undertake a remodeling project at this time a good financial choice.

The real estate downturn has also helped separate the wheat from the chaff when it comes to contractors; the fly-by-night ones have quietly disappeared and the more experienced ones have remained. This is likely due to their good customer skills, bidding accuracy, and successful relationships with subcontractors, as this is vital to survival in this industry. In order to find a reputable contractor, you should ask your family, friends, and neighbors if they can recommend one. You can also look on Internet sites that rate businesses in your community, although some require a monthly subscription to access them. In addition, you should check that the contractor you are considering hiring is in good standing with the local business bureau, especially if a deposit is required prior to beginning the job.

Since the real estate market is not expected to recover for quite some time, you will most likely be staying put for a while, which will allow you to enjoy the fruits of your labors. Although you should take into account the rate of return on your home remodeling project, you should also focus on making your house as pleasant a living experience as possible while you are still there. For instance, if you cannot decide between adding a media room or a third bathroom, you should know that a bathroom almost always adds to a home's value; however, if you are an empty nester now, a third bathroom would probably not bring you much enjoyment while a media room might, so that might be the right choice for you. In this market, remodeling or adding a room to your house will not dramatically increase its price. However, it also will not cause your property taxes to rise since the assessment is based on current market prices, and it will be several years until they return to normal levels.

Economically speaking, it makes a lot of sense to proceed with home remodeling at this time, especially if you need more room for your family. Talk to a contractor soon to see what he can do for you.