Even though home values have dropped, it still makes a great deal of sense to consider remodelling your home.
Not to long ago it was possible to undertake major home renovations and recoup your remodelling costs. According to industry experts the average costs that were recouped as of 2005 was estimated at 87%. Five years later this estimate has fallen to approximately 60%.
Despite this, there are still plenty of reasons why it makes sense to go ahead with the remodelling project that you have been thinking about.
Individuals who have a considerable level of financial muscle are positioned to take advantage of the current state of the economy as far as home renovations are concerned.
The current interest rates are some of the lowest in a very long time.
This means that if you have a HELOC, (Home Equity Line of Credit) your rate can be as low as 3% – 5%.
It also costs very little in lost income to draw from your savings account.
Contractors Are Cheaper
Despite the fact that the construction industry enjoyed a resuscitation of sorts in 2010, things are not yet back to optimal levels as was in the days of the real estate boom. Nowadays virtually all contractors are seriously bidding for jobs and to secure contracts they are quoting prices that on average are 10-20% lower than when the market was at its peak. Getting professional services for these friendlier rates has certainly made for cheaper remodelling costs.
Building Material Cost Has Declined
Alongside the previously mentioned contractors’ rates, the cost of materials has taken a nosedive. Five or six years ago it was really expensive to purchase materials like framing lumber, drywall and plywood but these materials are now quite affordable having gone down by 35%, 29% and 23% respectively.
The situation is not the same across the board though. Indeed there are materials whose prices have fallen by just a slight margin. Asphalt roofing is only 7% cheaper compared to the price from two years ago while the price of insulation has only fallen by a mere 2% in the last four years. With construction supplies being this cost-friendly more homeowners can manage the costs of remodelling their houses.
Save on Energy Costs
Undertaking renovations in your home, especially the kitchen or bathroom can really be the initiative you need to start living a green lifestyle and begin significant savings on utility expenses. You don’t have to tear down everything to use this approach – you can begin by installing new insulation, window panes, and appliances like solar panels.
While the savings you make won’t be significant enough to offset your remodeling costs, it will help over time. You can also take comfort in the fact that you are helping conserve the environment.
Better to Fix Up Than Trade Up
Some people believe that since the median price of houses has dropped 22% over the last four years, it is the best time to trade up on a new property.
Those in support of this position are of the opinion that purchasing a remodelled property at a discounted price is very convenient.
In some cases, this could be true, but only if you can sell your own house and can find another house that has all the remodelled features you like.
Truthfully, it doesn’t usually work like this. Plus, the cost of improving your house is far cheaper than moving to a new one. When you just consider the hefty fees and commissions you will pay to sell your house you will see that these expenses can actually pay for a significant amountyou’re your remodelling costs. That is just the selling part. Clearly buying a new house will be significantly more expensive and that you will also probably spend more money to move there and to spruce it up before you can move in comfortably.
Retain Your Sub-5% Interest Rate
If your financial health was in order, you may have been able to secure an interest rate that is below 5%. If you choose to buy a new home instead of remodelling your old one, you will likely lose this interest rate and your new mortgage will cost you several hundred dollars more in interest each month. Clearly, this won’t be the case if you focus on remodelling costs instead of selling.
Better Now Than Later
Chances are that when you finally decide to sell your home at some point in the future, you will need to undertake all the renovations that you didn’t do earlier. Not only will this be inconvenient and stressful but it might actually be more expensive. It’s likely that remodelling costs may have surged upwards by then. It certainly makes more sense to give your house that much required facelift now, if only to save yourself the hassles of getting the property ready for potential buyers later. In doing so, you (and your family) will also get to enjoy the results of your investment long before it is time to sell the house.
It’s Still a Good Idea to Invest In Home Remodelling Costs
Taking advantage of the current low remodelling costs is a real benefit for homeowners, keeping in mind that it is possible to recoup these costs at a later date when you sell the property. Industry experts suggest that the highest returns on investment are possible when renovations are done on kitchens, bathrooms, re-sidings, attic bedrooms and master suite bedrooms. The suggested amount to invest in a remodelling job is 20%-30% of your home’s value.
What Do You Think?
Do you have any experience with home remodelling costs? Any tips working with, or finding contractors?