Housing: Why nesting is the new Flipping
"If flippers were the poster children of the real estate boom, then nesters
are becoming the icons of the new housing market," said Les Christie in CNNmoney.com. Spending on remodeling increased 8.7 percent between September and October, and contractors in some areas say their phones are ringing off the hook with phone calls from owners interested in updating. "Many people consider buying to get more space," says Jeff Hunt, vice president of Houston-based Brothers Strong remodelers.
"But when they look at all the costs, they figure it makes sense to stay put." Unlike many of the renovations that took place during the boom, however, these aren't being paid for by owners tapping home equity loans. "Financing is still very tough," says Bob Peterson, president of ABD Design/Build in Fort Collins, Colo. "Nearly all my clients are paying cash."
Even when home prices are on a downward slide, certain home improvements can still help resale value, said Geoff Horen in The Indianapolis Star. According to Remodeling Magazine's annual "Cost vs. Value Report," the most prudent improvements are those that boost "curb appeal." Top among them: replacing old siding with quality fiber cement siding or vinyl siding, and adding a moderately priced wood deck. As has always been the case, improving kitchens and bathrooms is a good move. "These rooms are where home buyers expect money to be spent."
It also makes sense to put money into boosting a home's energy efficiency, given that government subsidies for such improvements are "rolling out as never before," said Aubin Tyler in The Boston Globe Magazine. Make a close study of the government incentives available to you for making various improvements. A $1,500 federal tax credit, for instance, could reduce the cost of such improvements as adding insulation or replacing old windows, doors, and appliances.
Many states offer additional incentives. For example, MassSAVE, a public-private partnership in Massachusetts, pays as much as $2,000 for weatherization and $1,000 for gas-heating upgrades. You're sure to feel more comfortable as you settle in and wait for the market to heat up again.
THE WEEK Magazine Dec. 25, 2009-Jan. 8, 2010