Home Improvement Lite
As Market Chills, Owners
Try Cheaper Renovations;
'I Made Some Bad Decisions'
By JUNE FLETCHER
February 16, 2007; Page W10
The housing slump is hitting the home-improvement industry.
After several years of double-digit increases, spending on remodeling was sluggish last year. In response, manufacturers of countertops, appliances and other remodeling products are introducing cheaper alternatives as homeowners trim their makeover budgets -- scaling back the size of their projects, doing their own handiwork or acting as their own contractors, sometimes with disastrous results.
At the International Builders Show last week in Orlando, Fla., Acoustic Ceiling Products came out with a plastic backsplash that resembles tin but costs half as much. Viking Range Corp. rolled out 72-inch-tall stainless-steel refrigerators priced at $2,875, scaled down from their 84-inch, $7,975 behemoths. And Lutron Electronics introduced do-it-yourself options at about half the price of some of its professionally installed lighting systems.
The new products are a departure from many of the luxury lines introduced during the housing run-up, when giddy homeowners thought nothing of putting in $1,200 hand-blown glass sinks, rock crystal chandeliers and tricked-out spas with built-in flat-screen TVs. As real-estate prices rose, such improvements often paid off handsomely when the house was sold.
But as home prices have fallen, so too have the financial rewards of renovating. The median price of new and existing homes dropped 10%, to $225,000, in the fourth quarter of 2006 over the same period a year before, according to the National Association of Home Builders. The value of remodeling has been shrinking, too: A homeowner who finished a basement -- a $57,000 job on average nationally -- got back 79% at resale in 2006. In 2005 the same job returned 90%, according to the 19th-annual Hanley-Wood's Cost Versus Value survey, published last fall. Remodeling a bathroom with upscale products like stone countertops and a bidet cost $38,000 and returned 77% in 2006, down from 93% in 2005.
The diminishing returns have dampened spending on remodeling, which grew by 1.5%, to $168.7 billion, in the fourth quarter of 2006 over 2005, according to a report released in January by Harvard's Joint Center for Housing Studies. In 2004 and 2005, quarterly increases were as high as 20%. Many homeowners are choosing to "postpone or pass on major home improvements," says Nicholas Retsinas, the director of the center, and that is likely to continue until the housing market picks up.
Less is More
At the builders show, Formica Corp. launched 26 laminate countertops that mimic wood, river rocks and even algae, with names like Planked Deluxe Pear, Walnut Quarstone and Tangle Seaweed and priced from $11 to $24 per square foot installed. Meanwhile, the company offered only four new versions of its more expensive solid-surface counters, which cost $28 to $48 installed.
Therma-Tru, known for its high-end entry and patio doors, introduced a fiberglass line with faux wood finishes that mimic cherry, mahogany, walnut and oak. Prices start at $692, about half the price of custom, solid-wood doors.
Appliance manufacturers are adjusting to the new austerity as well. For its Profile line, General Electric introduced a freestanding range with four burners and double ovens. It's a scaled-down version of some of the giant six-burner commercial ranges that have been popular for a decade -- and at $1,199 to $1,499, about one-third the price.
Even one of the so-called idea homes at the show reflected a chastened post-boom mindset. In the Renewed American Home, a renovated 1909 bungalow in downtown Orlando, many of the house's original wood finishes and trims were replaced with realistic but cheaper fakes, including laminate cabinets and wood-composite interior doors. "It's like the car industry bringing out cheaper versions of luxury cars," says Stephen Gidus, the Winter Park, Fla., builder who remodeled the house.
Downscaling Downstairs
When Stu Fause, a retired hospital executive, decided to create a media room in the basement of his New Tripoli, Pa., home last year, he scaled down the project, in part because home prices in his area, while not falling, aren't appreciating at the double-digit rates that they were two years ago. Instead of finishing the entire space, he had two-thirds of it done and placed his big-screen television on a $160 stand from Target rather than spending ten times as much to have it built into the wall. He also opted for inexpensive materials like sheet-vinyl flooring, and a fiberglass tub and surround in the bathroom. The entire job cost him $15,000, about a third less than if he'd finished the whole basement and used premium materials.
Mr. Fause, who has no immediate plans to move but is remodeling with an eye to resale, figures he can get away with downscaling downstairs because the rest of his four-bedroom home, which he bought last year for $427,200, already has pricey features such as marble baths and a whirlpool spa. In a declining market, he says, owners have to be judicious about where they spend their remodeling dollars. "It's what's upstairs that counts," he says.
Some manufacturers are more actively courting the do-it-yourself market, which exploded during the housing run-up and has continued apace during the slowdown. In 2005, cost-cutting homeowners spent $44.9 billion on DIY projects, up from $38.1 billion in 2003, according to the Harvard housing center.
Lutron Electronics introduced its first DIY system at the builder's show -- a preprogrammed, wireless "smart" lighting-control package called AuroRa. It includes a control panel, remote-control antennae and five dimmer switches that the company says can be installed by anyone handy enough to replace a light switch. Total cost: $750, about half the price of a professionally installed system. DuPont, meanwhile, brought out Simplicity, a countertop that's built to the homeowner's specs and arrives ready to install. At $29 a square foot installed, it's 42% cheaper than averaged-priced site-built countertops, the company says.
Of course, doing it yourself doesn't always save money. Over the past year, Craig Margulis, owner of a Phoenix handyman service, has seen a spike in calls from people who want him to repair their mistakes. And these days, many of the callers live in million-dollar homes. Mr. Margulis thinks that's because they're tapped out after stretching to buy their houses at the height of the market. "They'll try to do everything themselves to save a few dimes -- and then we have to rip everything they've done out," he says.
Megan Bittle, a St. Louis kitchen designer, is seeing more of what she calls "buy it yourself" clients -- affluent homeowners who won't get their hands dirty but try to save a little money by acting as designers and general contractors for their projects. The strategy often backfires, she says, because home products are becoming increasingly complicated and there's a shortage of skilled labor. She recently got a frantic call from a homeowner who'd hired an inexperienced plumber to put in a sophisticated shower system. The plumber installed a valve upside down, reversing the hot and cold taps, and the newly tiled bathroom wall had to be torn down to fix the problem.
Repapered, Rewired, Regrets
Kim Hanson-Brown and her husband, Don, had their share of problems last fall when they renovated their 19th-century home in Unionville, Va., recently appraised at $2.5 million. They decided to transform the dated farmhouse into a French Country-style manor, with arched doorways, wrought-iron chandeliers, and red and yellow toile wallpaper. They chose high-quality materials to stay competitive with other horsey estates nearby. But since they couldn't be sure that home values would continue to appreciate as much as during the boom, the couple tried to shave costs by doing the plans themselves and hiring local subcontractors to do the work.
Though they thought they were up to the task, the couple made plenty of mistakes. First they had their ceilings finished with fresh drywall -- only to realize they'd forgotten to plan for light fixtures; the ceilings had to be taken down so wiring and junction boxes could be installed. In one room that was wallpapered before a leaky upstairs shower was fixed, a wall got moldy and the pricey paper had to be stripped and replaced. Another room was painted before demolition work was begun on an adjacent bathroom; when a sledgehammer broke through a wall, it had to be patched and redone. Oops.
"I made some bad decisions," says Ms. Hanson-Brown, a specialty magazine publisher. The couple figures they'll wind up spending at least $100,000 on the project (still in progress), more than three times their original budget. They recently hired an interior designer and are planning to hire an architect as well to guide them through the rest of the process. Although she doubts they will recoup their costs, Ms. Hanson-Brown thinks the upgrades will help sell the house more quickly.
Some homeowners are hiring a pro to do the planning and then doing most of the labor themselves. That's what Michelle Wandres and her husband, Tom, did when they decided to upgrade the yard around their five-bedroom Victorian in Germantown. Md., last summer. They had a landscape designer do the plans and then went to work installing lighting, planting bushes and trees, and laying walkways. Doing the work was a "real headache," says Ms. Wandres, a graphics designer, but it cut costs in half -- a sensible approach in a market where prices of similar homes have fallen from about $1.1 million to $900,000. She hopes to sell when her son goes off to college next year, and wants her house to be in top condition so it will be competitive. In her price range, she says, "buyers expect certain things."
|
Preparing Your Home For Sale
|
First impressions make a significant impact on a buyer's decision-making process!
Once your home goes on the market, it becomes a product. Home Styling or Staging simply allows you to highlight the best of your home and de-emphasize its flaws. It's not about decorating, but actually turning your home into a model, to appeal to the broadest range of prospective buyers. The goal is to make people feel like they could live there, and the best way to do this is to "neutralize" the surroundings. Read more...
|
|