Share this story
Close X
Switch to Desktop Site

The big fix-up: home renovation hammers and saws to record highs

The dream of every ambitious homeowner once was to move up to a bigger, better house with more amenities. But these days, homeowners are as likely to fix up as to trade up. Families across the country are spending record sums to spruce up, restyle, or add on to their homes, reports the National Association of Home Builders' Remodelors Council. Last year, the council estimates, homeowners shelled out $93.7 billion for restoration and remodeling - more than double the amount spent five years ago.

Dollar for dollar, renovation will surpass new construction sometime in the middle 1990s, predicts Robert Sheehan of Regis J. Sheehan & Associates, a market research and management consulting firm. ``The demographics are working against new construction. We are moving from the baby boom to the baby bust generation. ... There are so many fewer potential households because the number of people aged 18 to 24 is declining.''

About these ads

A look at the top home-improvement markets suggests another reason for the surge. ``Remodeling is the strongest where land ... is scarce and expensive, or where there is a large inventory of older buildings,'' says a recent study by the trade magazine Remodeling. ``Remodeling is the strongest from Boston to Washington, as well as the California coast and most major urban areas in the United States.''

``In major urban areas, the cost of land for new construction went out of sight because there just wasn't any more of it close,'' explains Ann Marie Moriarty, feature editor of Remodeling. ``The suburbs have gotten to the point where they are now big enough so that going farther out is no longer a solution. You go farther out, and you're in the next state and your commute is two hours each way.''

A much more reasonable option, particularly for families that have put down roots in their neighborhood, is to stay put and change their house to suit their needs.

A fresh coat of paint is still the most popular home improvement. But people are also plunging into more ambitious projects, such as adding second stories, converting attics and basements to living space, redesigning kitchens, and installing deluxe bathrooms complete with king-size whirlpool tubs.

Richard Shapiro of Rye Brook, N.Y., is typical of homeowners in the active real estate markets of the Northeast. Rather than move from their 30-year-old house, he and his wife are redoing their kitchen and den and putting in insulation. And, like many families in Westchester County, they may later add another bedroom.

``Housing prices in our area are ridiculous,'' Mr. Shapiro says. ``And while I would make a profit if I sold my existing house, the pain and suffering of moving and the trouble of having to do basic redecorating work on a new house I think would be more expensive.''

Temptingly low mortgage rates have helped fuel the rehab boom by accelerating the turnover of existing homes. A recent study shows that most home improvements are undertaken in the year before or the two to three years after a home is sold.

About these ads

The steady rise in home prices across the US encourages people to invest in improvements, because they figure they'll get that money back again when they sell their house, says Stephen Grant, an industry analyst with Value Line Inc.

Another reason for the rehab surge, maintains Bob Vila, host of public television's ``This Old House,'' is ``the status of living in an antique, and the fact that antiques are usually located in old neighborhoods that have fallen into disrepair and need to be brought back. ... As a result, you get areas like [Boston's] South End and Back Bay revitalized by a whole socioeconomic class that wants to live in that kind of status housing.''

Even rental housing has contributed to the boom. Spurred by the growth of new apartment buildings, apartment owners have had to upgrade their properties to remain competitive, says Mr. Sheehan.

No matter what happens to the economy over the next few years, the rehab trend is likely to remain strong. ``Housing stock from the postwar building boom is now of the age where it needs major work,'' notes Remodeling's Ms. Moriarty. That started about 10 years ago, she says, and ``it has gone nowhere but up since then. Also, they're not making any more new land, so I expect it to continue to grow.''

Businesses that stand to benefit most from all the fixing up include manufacturers of appliances and plumbing fixtures. ``The big things to do are kitchens and bathrooms,'' Sheehan reports.

And homeowners aren't just updating - they're upgrading. ``The house they've been in may have had middle of the line [fixtures], and now they're going to the top of the line. They're more likely to get a larger tub, a Jacuzzi, things like that,'' Sheehan says.

Among professional remodelers, design-builders will continue to be sought after, says Moriarty, because they can provide one-stop shopping. ``People are very interested in anything that will keep them from spending a whole load of time on a major project like this. They want to be able to say, `OK, do it. Tell me when it's going to be done.'

``Design-builders, who don't have to work as much with subcontractors and don't have to work at all with architects, can theoretically keep a project under tighter control, so it goes smoother and takes less time.''

For the 25 percent of homeowners who prefer to tackle projects themselves, the large-chain home center is the place to go for building supplies. Gregory Nejmeh, an analyst with Shearson Lehman Hutton Inc., reports that giant suppliers like Home Depot, Hechinger Company, and Payless Cashways are grabbing larger and larger shares of the business, at the expense of old-style hardware and building supply stores. Home Depot, a star performer with an 82 percent growth rate since 1979, draws customers by offering low prices and in-store classes on such things as building basement walls.

``About the only thing you can't say is benefiting extremely is lumber,'' Sheehan says. ``A lot more lumber goes into new construction than goes into a remodeling project. But you could take almost any other component, ... even gypsum board. In the gypsum industry, remodeling has taken a much more important share. It used to be that with gypsum and a lot of building materials, you could forecast what was going to happen to your product by forecasting new housing starts. That's no longer true. You have to know what's going on in remodeling.''

Follow Stories Like This
Get the Monitor stories you care about delivered to your inbox.