HARVARD STUDY PREDICTS AN ANNUAL RISE OF 3.7% AS MARKET FOR NEW HOMES SLOWS

ORINDA - Bekki Van Voorhis Gilbert loves her new kitchen.

Instead of institutional white cabinetry and being closed off from the rest of the house, the new room is earth-toned and flows into the rest of the house. The living room has been changed from a brass-and-white “Dynasty”-era space to warmly varnished woods, neutral colors and a sea-green limestone plaster fireplace.

“We moved here in 2002 knowing we wanted to remodel,” she said of the 2,500-square-foot house built in 1966. “We almost didn’t get this house, but after we took a measure of the market, I said, `Let’s buy it and remodel.’ ”

Gilbert, 40, and her family are among a growing number of homeowners who instead of buying a new home are creating their dream home out of their old home.

The Harvard University Joint Center for Housing recently released a statement projecting that remodeling would increase by 3.7 percent a year, or 44 percent from 2005 to 2015. Because of the slowdown in home sales, more homeowners are staying in their homes longer and taking on long-neglected projects, experts said.

“Homeowners are nervous about prices and what new prices will do,” said Nicolas Retsinas, the center’s director. . “So if they can’t get the price they want, they’re putting in a new kitchen. . . . It’s an alternative to moving up.”

Cameron Habel, an Oakland-based contractor who worked with Gilbert to create her vision, agreed.

“Remodeling hasn’t really slowed down very much in the last five years,” he said. “A number of people have been in their homes for a while, their equity has increased and so they can afford to make changes.”

But Habel said something else has changed awareness. Habel said that with the explosion of do-it-yourself cable programs, many homeowners already know what they want, like copper fixtures and glass mosaic tile.

“They want it fresher, cleaner and brighter,” Habel said. “They want their house to fit them.”

Dan Fritschen of Sunnyvale, and author of “Remodel or Move: Make the Right Decision” and the founder of RemodelOrMove.com, found in a survey of 5,000 homeowners that many people are interested in remodeling this year, mainly because of the uncertainty of the housing market.

“It’s now much less risky to remodel,” he said. “Material prices have come down in the last few years, labor is readily available because new home construction is slowing up.”

According to Gopal Ahluwalia, vice president for research at the National Home Builders Association, most of the remodeling occurs before a sale or in the 12 to 24 months after a purchase.

“When you sell your house, you try to fix it. When you buy one, you try to put your stamp on it,” he said.

Another reason for remodeling is the aging housing stock across the nation, he said. In 2005, the median age of a home was 32, up nine years from 1985.

“People are trying to bring their 1960s and 1970s homes into the 2000s,” Ahluwalia said.

For Ben Gordon, 62, a retired bank executive, a remodel meant improving his house for an eventual sale. He has lived in the house since 2001 and is using savings to pay for the $100,000 remodel.

“It’s more marketable,” he said. “And with a kitchen remodel, statistically we would get back the full price.”

Source:

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