Don’t Overdo Home Renovations in a Down Market
HGTV will inspire you to add granite countertops, install top of the line stainless steel appliances, and overhaul you bathrooms, however, now more than ever, this may be a bad idea. The subprime lending crisis continues to drag down housing prices no matter how gorgeous your newly remodeled kitchen is. According to the National Association of Realtors, homeowners pumping money into fancy remodels can expect to receive less on their investment when they sell compared to that of only a few years ago.
Don’t Out Remodel Your Location
As tempting as it may be, there is not a financial reward for outdoing the Joneses’. In general, your home price will be reflected with those around you. Because of this, upgrades should be well thought out, as to improve your home as well as an overall value you can expect to recoup. In our current housing market, there is greater inventory of houses than we have seen in the past, which makes selling your home difficult. If you plan to sell your home in the next 1-3 years, be cautious of your upgrade decisions. The same rules still apply when upgrading your home – kitchen and bath remodels will generate a greater bang for your buck – but how much we should invest in these remodels have changed. Remodel on a strict budget, it’s not necessary to put in oak cabinets or exuberant showers, as you cannot out-remodel our current markets. Make your home presentable; improve the look and feel without maxing out your credit cards. As my wife and I have recently found remodeling our new home, you can be amazed how far frugal remodels will go. By doing a lot of the work ourselves, we have dramatically turned our place around cheaply with new floors, paint, and basic new fixtures. The change is dramatic, but our debt level is not.
If You’re Staying Put, It’s Ok to Spend the Extra Dollar
If you plan on living in your house for many years to come, by all means, spend the extra dollar, as you will be doing it for yourself. The market is sure to come out of it’s current funk, and by being patient you will benefit. Your home is something you live in, you want it to be a place you can’t wait to get to. When upgrading, keep this in mind. $
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