Homeowners Cut Back on Renovations in Recession

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By J.W. Elphinstone -- AP Real Estate Writer

The estimate: $13,600. The reaction: a hammer.

Daniel Bell is doing demolition work himself after a contractor told him how much it would cost to remodel the upstairs master bedroom and bath in his 85-year-old farmhouse in Brentwood, Tenn. He's doing the trim work and painting too, and will shave $3,725 off the total bill.

"You don't need a highly skilled person to do those things," said the 37-year-old minister, who tackled a good chunk of a downstairs renovation last year.

Spending on home improvements continues to decline as rising unemployment and falling home prices dissuade consumers from investing in costly renovations. Homeowners spent $124.6 billion on property improvements (excluding maintenance) in the first three months of the year, down nearly 8 percent from the year-ago period, according to Harvard University's Joint Center for Housing Studies. This year, the Center estimates spending on such projects will fall by 12 percent.

The remodeling industry is adjusting by cutting prices and offering a larger selection of lower-cost products and finishes. Contractors are helping homeowners scale back plans to make projects more affordable, and acting as consultants for homeowners who are willing to put in the sweat to cut costs.

A recent survey from ServiceMagic showed that online requests for smaller projects like countertops or window coverings rose in the first quarter compared to a year ago, while demand for larger remodels decreased. Requests for maintenance and repairs like heating, insulation, air conditioning — thanks to new energy-saving tax breaks — also increased during the quarter.

"People are doing things like cleaning upholstery and floors rather than replacing it," said Craig Smith, chief executive ServiceMagic, a professional services locator. "Or they're downshifting. They're still investing in kitchens but they're doing it more cost effectively."

Earlier this decade, home remodeling was fueled by "unique circumstances" like a runaway housing market, low interest rates and loose credit. It won't rebound until housing prices stabilize and the payback on home renovations improves, Kermit Baker, director of the remodeling program at the Joint Center

"What has been hurt has been the upper-end discretionary projects like kitchen and bath remodels, structural projects and room additions," Baker said.

And remodelers like Luckjohn Dickson are taking what they can get.

Instead of building a new porch, Dickson repaired the old one for one client to help him save on costs. To spruce up her house, another client had Dickson's crew build a picket fence rather than add another room like she originally intended. His company has patched up rotting cedar siding and plastered leaks in ceilings, jobs it used to pass on.

"We'll take on handyman type of projects to keep people employed," said the president and chief executive of Savannah Kitchen & Bath in Georgia. He's also brought in more inexpensive products for his showroom, including cabinets and appliances, to help homeowners come in under budget.

Peggy Mackowski of Quality Design and Construction in Raleigh, N.C., is offering recession remodeling packages for kitchens. Starting at about $16,000, the one-month renovation includes oak cabinets, new appliances, granite countertops, tile backsplash, hardwood or tile floors, stainless undermount sink and labor costs.

Mackowski, vice president of the company, launched the program once in February with no success. But she's hoping for a better reception this time since recent indicators have shown a bump up in consumer confidence.

"Even though they might not be able to sell their house now, I think people want to do an inexpensive facelift in case they resell in the future and they can enjoy it now," she said.

April Case-Underwood, senior kitchen and bath designer at Case Design/Remodeling Inc. in the greater Washington, D.C., area, has helped clients pare down remodeling costs. For one project, she had the existing kitchen cabinets repainted instead of replaced, cutting $30,000 from the final price of $60,000.

"You can save about 50 percent by picking out certain products over other products," she said. "People are backing away from embellishments that don't add function."

In his farmhouse in Tennessee, Bell admits his workmanship isn't as good as a professional's and takes twice as long to finish. But he thinks it's worth the effort for a house he wants to live in until retirement.

"Here's the catch, my trim work is OK. Nobody notices anything until I point it out," he said. "But those are the financial decisions you make."

The new granite countertops may need to wait. But if you're looking for ways to spruce up your home without a full scale remodel, here are a few tips on how to get started.

1. Set priorities. As you think about all the changes you'd like to make, figure out what you think you really need versus what can wait for a later date.

2. Educate yourself. There are lots of Web sites and magazines geared toward do-it-yourself projects. Take the time to create a detailed plan.

3. Keep it relatively simple. Don't take on knocking down walls and electrical work if it can wait. Plus there are more potential missteps with complex projects.

Here are some tips for some common areas you may be looking to improve:

  • Floors: Even though they may look dingy, make an effort to professionally clean floors and carpeting before you pony up your hard-earned money to replace them. If you decide to replace the flooring, look for clearance sales. You may be able to find a great deal on discontinued lines.
  • Kitchen: Consider painting kitchen cabinets and replacing the hardware to freshen up the kitchen.
  • Bathroom: Adding a frame to an existing wall mirror, can help give the bathroom a higher-end appeal.

Copyright 2009 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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