Home builders are diversifying in every which way to ride out the downturn, and that includes rehabs and additions. Some 44 percent of single-family builders in the latest NAHB member census reported residential remodeling as a secondary revenue stream. And while a forecast by Harvard University’s Joint Center for Housing Studies indicates that remodeling spending will continue to see 12 percent declines in the second and third quarters of 2009, the renovation business is faring better than new construction. A recent survey conducted by the Web site RemodelOrMove.com found more than half (52 percent) of homeowners polled saying they were “excited” about remodeling their houses. Of those, 65 percent said they planned to hire a general contractor. For builders, remodeling projects typically carry less risk, in that they don’t require construction loans. And for homeowners who qualify for home equity loans, there are paybacks. According to the “2008–09 Cost vs. Value” report, an annual study issued by Builder’s sister publication Remodeling, moderately priced upgrades continue to provide stable returns. While home prices fell 7 percent on average last year, the value of homeowners’ investments in remodeling projects declined a lesser 3.86 percent. Many experts now anticipate that retrofits intended to make older homes greener and more energy efficient will keep this sector humming in the new economy. Plus, there are all those foreclosed properties that will need to be fixed up for resale.
Thinking about getting into the spirit of reuse? Builder looks at the challenges presented by three large-scale rehabs.