The housing market is tanking. Time to renovate
Jenny Wong McLoughlin routinely makes the rounds of open houses around New York City, always with an eye open for a real estate deal too good to ignore. But with no hot prospects in sight, she and her husband, Chris, are rolling up their sleeves and pouring their energy into their own version of an extreme makeover, to their Queens apartment.
“Our next move is to a house for the extra space,” she said. “But until home prices come down further, we are investing in our apartment so we can enjoy the added comfort and enhance its appeal when it’s time to sell.”
With new and existing home sales plummeting and mortgage lending all but frozen from the fallout of the subprime meltdown, Wong McLoughlin, a 29-year-old data manager, along with her husband, an information technology expert, are joining homeowners across the country who are hunkering down and making the best of the worst real estate market in decades. As they wait for an upturn in the market's fortunes, they’re positioning themselves for a rebound. But they may have a long time to tinker.
Robert Shiller, a Yale University economist who has studied U.S. real-estate trends, said he believed that the decline in home sales has not yet bottomed out. Still, he predicts the slump may “continue for more than a year” before sales bounce back.
Until then, the lull in activity offers homeowners a chance to enhance the value of their existing property.
"The real estate market is cyclical, so this depressed market will rebound," said Nancy Wallace, a professor at the University of California, Berkeley's Haas School of Business and an expert in residential real estate prices. "It's smart for homeowners to protect their biggest asset, which is their home, by making investments that sustains the property's value during a downturn."
Bruce Baxter, a manager with WellmadeCorp, a Wilsonville, Ore., supplier of home furnishings, has seen the ups and downs of the housing market. He has advice to owners looking to sell next year: “Get aggressive!”
“Now is the time to take your home and start adding value to it,” he said. Putting down new flooring is one of the best approaches to entice buyers, Baxter said. “It’s the first thing people notice when they walk into a house.”
Homeowners are not just making simple improvements; many are revamping homes to suit changing lifestyles as well as accommodate increasing environmental pressures. For example, bamboo, a perennial plant native to Asia, is quickly becoming a favorite choice for flooring among environmentally conscious homeowners.
“There is no home furnishing more environmentally friendly than bamboo,” said Anita Howard, communications director for the National Wood Flooring Association. “Unlike trees, once it has been cut down, it grows back.’’
Kitchens are also changing. The traditional kitchen dedicated exclusively for the preparation of food is becoming a thing of the past. Designers envision a family space without boundaries, where families eat, play, watch TV and work.
Wong McLoughlin wanted to socialize with her guests while also preparing meals. So, when she planned a complete renovation of her kitchen, she tore down the wall separating it from the living room. In its place she installed a granite-topped island that serves as a seamless border between the two areas.
“The open kitchen, with its ubiquitous central island, had definitely caught on,” said Stephen Burks, who heads up Readymade Projects, a New York interior design studio.
Choosing a stone countertop can dent the improvement budget. “Price comparison and the willingness to negotiate are absolutely essential if you want to stay within budget,” Wong McLoughlin said. Walking into a storefront dealer, her first price quote came in at $3,000 for the natural stone she coveted. After scouring the city for other vendors, she found the same countertop for $800 at a dealer in nearby Brooklyn.
With soaring energy prices in mind, Wong McLoughlin replaced all the kitchen appliances with new energy-efficient models. “It’s a big help when talking to prospective home buyers concerned with energy consumption,” she said.
Adding new energy efficient fixtures isn’t just enhancing the “green appeal” of a home.
According to the Department of Energy, 20 percent to 50 percent of a home’s heat and cooling leaks out through doors, windows and ceilings. Experts say that homeowners looking to save money now and transform their homes into an environmentally friendly dwelling can start by insulating attics and sealing leaks.
While winter is a perfect excuse to redo interior rooms for the anticipated thaw in the home sales, homeowners are looking to do outdoor improvements too.
Annette Maine with Nebraska Furniture Mart, a home improvement retailer, has seen steady homeowner demand for decks, pools and fire pits to improve the long-term value of their properties.
"Even though times are hard for home sales, folks still have a lot of needs and not just wants," she said. "People are saying they are going to stay put for now, remodel and ride out the market.“
In Colorado City, Texas, where existing home sales have ground to a halt, Patrick Taylor is adding an outdoor kitchen to his modestly sized house to woo future homebuyers seeking plenty of entertainment space.
“My kitchen is so small you got people bumping butts if someone’s at the stove and another’s at the sink,” he said. The climate in his West Texas town of 5,000 allows for outside gatherings nine months of the year, said the avid do-it-yourselfer, who hopes to trade up to a larger house.
A frequent pitfall is to underestimate the amount of time it will take to finish a project. Home improvers often plan three times as much work as they can complete in a weekend, according to Taylor, who advises others to plan accordingly .
When the renovations are finished and prospective homebuyers finally start showing up, Wong McLoughlin underscores a perennial piece of advice: "Bake cookies during the open house."
"There's nothing like the aroma of fresh cookies to give a buyer a warm feeling about your home," she said.