Sometimes when you fall in love with a community, you’re willing to buy the smallest house in the neighborhood to live there. Husband and wife Peter Suskind and Andrea Spiegal purchased their home in the Langley Oaks neighborhood of McLean in 1998, and even before they had children, they knew the family room was “cozy.”

“Now we have two teenagers, and we definitely outgrew the family room,” Spiegal says.

Spiegal and Suskind, whose initial idea to convert a screened porch to a larger family room morphed into a major renovation, are among the many homeowners who decide to remodel rather than move.

“Moving might have made financial sense since we bought this house for $450,000 and paid more than that for our remodel, but we couldn’t find another location we liked as much as where we live right now,” Suskind says. “Houses in our area are priced over $1 million, which also factored into our decision.”

Spring, traditionally a busy time for home-improvement projects, is expected to be busy in 2017, too. According to HomeAdvisor’s 2017 True Cost Report, the average homeowner spent nearly 60 percent more on home projects in 2016 than in 2015. Nearly two-thirds of homeowners in the survey by the Golden, Colo.-based online home-improvement marketplace say they plan to spend the same amount or more this year.

More than half of homeowners surveyed by Houzz (52 percent) say they plan to continue or start renovations in 2017.

Why remodel

The remodeling industry has had a 6 percent to 7 percent growth each year for the past five years, which is anticipated to continue this year, says Kermit Baker, project director for the Remodeling Futures Program at the Joint Center for Housing Studies (JCHS) at Harvard University in Cambridge, Mass. The Leading Indicator of Remodeling Activity by the JCHS projects annual growth of 7.3 percent in the first quarter of 2017, declining slightly to 6.1 percent by the first quarter of 2018.

“Some of this growth is coming from people catching up on deferred maintenance after the recession,” Baker says. “But we’re also seeing low mobility rates because of low inventory in the housing market and because mortgage rates have been so low for so long that some people are choosing to stay in their homes rather than buy at a possibly higher mortgage rate.”

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Low mortgage rates and rising home values mean that homeowners have more equity in their homes as well as access to low-cost home equity loans to finance improvements, says Brad Hunter, chief economist at HomeAdvisor. At the same time, high home prices sometimes make it more economical for people to modify their existing home than to buy a new one.

While some people remodel because they want to stay in their home, moving also drives home-improvement projects. Research by the National Association of Realtors shows that the No. 1 reason people decide to move is that they’re tired of their existing home, Hunter says.

“Moving stimulates home improvements in two ways,” Hunter says. “First, the homeowners need to improve their curb appeal to sell their house. Second, they want to personalize their new home.”

Baker says the rise in remodeling activity is primarily driven by baby boomers, who have the most home equity.

“Another big driver of the market and one we think will take off even more soon is home improvements to make it easier to age in place,” he says.

Baker says that 50 percent of home-improvement projects in any market are replacing floors and windows.

“We pay attention to discretionary spending on remodeling, which is currently 35 percent of all home-improvement spending,” Baker says. “That compares to 40 percent in 2003 to 2007, but that was an unusually active time in the housing market.”

Hunter says HomeAdvisor’s surveys show that more homeowners are choosing bigger projects, such as renovating their entire kitchens instead of just purchasing new appliances.

“It’s not unusual for homeowners in this area to spend $100,000 to upgrade their kitchen,” says Michael Winn, owner of Winn Design+Build in Falls Church, Va. “People have different expectations in this area. What they think is modest wouldn’t be in other parts of the country.”

Remodel or move

Homeowners in the Washington region are often driven to remodel because of the high cost of housing in the area.

“Our customers tend to be in the close-in areas of McLean and North Arlington, so because of their commute and the convenience of their location, they don’t want to move further out to get a bigger house,” says Wilma Bowers, co-owner of Bowers Design Build in McLean, who worked with Spiegal and Suskind. “They’ll also decide to invest their time, money and energy into a renovation if they can’t find another nearby home that meets their needs.”

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Bowers says a common calculation is that someone who paid $800,000 for a house five years ago might need to pay $1.3 million to $1.5 million to find a larger house in McLean that’s still not exactly what they want. Instead, they’ll choose to spend $500,000 for an extensive renovation that meets their needs.

“When we work with people, we discuss the pain points in their house and potential solutions at a ‘good, better or best’ level,” Bowers says. “Then we can talk about their budget and prioritize what’s most important and what will have the biggest impact.”

Bowers says an essential element in deciding how much to spend on a renovation is how long the homeowners plan to stay in the house and what their return on investment might be when they are ready to sell.

“Our clients reach a tipping point when the cost of a major addition or renovation is $500,000 or $700,000 or above when they seriously consider whether it makes more sense to tear down and start over or to sell and move,” Winn says. “A lot of people decide to renovate even at that point because they like their neighbors, their neighborhood and their kids’ school. They also don’t want to go through the disruption of moving or the uncertainty of whether they will be able to find something in their price range that they want.”

Darren and Halee Robbins, homeowners in Arlington who worked with Winn Design+Build, expanded their 1,200-square-foot home with two bedrooms, one bathroom and an unfinished basement to a four-bedroom house with four bathrooms, a finished basement and a garage. Darren Robbins has three children from a previous marriage, two of whom live with him half the time, and the couple also have a child together.

Knowing they needed more space, they chose to remodel rather than move because they like their neighborhood and the schools and wanted to stay close to the older children’s mother’s home.

“We thought we would save money by remodeling because when we looked at houses nearby, they cost $1.25 million to $1.3 million, and they didn’t have as big a lot as our house,” Darren Robbins says. “In the end, it cost about the same as if we had moved. I bought the house for $511,000 in 2012, and we spent about $750,000 on the remodeling.”

Winn says the quintessential North Arlington project, which costs $300,000 to $400,000, is to add a two-story addition with an open kitchen and family room on the first level and a master suite on the second level. The Robbinses’ project was larger and essentially required an almost-complete gut renovation of the house to create an open floor plan with a central kitchen, an informal but partially separate dining room and a living area at the back of the house.

Spiegal and Suskind expanded the scope of their project from converting their screened porch to a family room into a remodel that added about 50 percent more square footage.

“We widened the mudroom and separated the laundry room with pocket doors so we had a more functional family entrance,” Spiegal says. “We expanded the kitchen with a walk-in pantry and a larger island. The new screened porch is accessible from the kitchen, so we eat there almost all the time.”

The couple converted the formal dining room into a home office and put their dining table in the former family room in front of a fireplace.

DIY or hire help

Depending on the project you have in mind, you may want to try to do it yourself.

“If you’re handy and need to save money, you can take on things like building a closet system or painting, but keep in mind that if you take on something you can’t handle, it could cost you more in the long run if you have to hire someone to fix your mistakes,” Hunter says.

Some clients ask to do part of their renovation work themselves or to hire a friend or relative, Winn says.

“We used to always say no because we want to be responsible for a whole project,” he says. “Since the recession, we’ve been a little more accommodating to this. If someone wants to hire an outsider for a critical part of the project, such as the plumber, we involve that person from the beginning of the project. We ask for competitive bids and to commit to the schedule. That way, if they’re not starting or finishing on schedule, we can take care of the work. There are real costs if the project management isn’t under control.”

If you decide to hire someone, experts recommend comparing reviews by homeowners on websites such as HomeAdvisor or Angie’s List. They also suggest looking up your project on YouTube so that you’re prepared to ask detailed questions when you interview contractors.

“Budget conversations can be difficult early on because clients have vague ideas about what they want,” Winn says. “I suggest they look at projects we’ve done to find something they like and show them what it could cost to do something similar in their house.”

Winn says homeowners should take as long as a few months to discuss their options with several firms to avoid the trap of choosing a company and a design based on the lowest estimated cost.

“Choosing a remodeler is like choosing a three-legged stool based on time, cost and quality,” Bowers says. “If cost is your biggest concern, you may need to give up a little quality or extend the time of your project. All three are important to keep in balance.”

Major renovation projects can take six months to a year or perhaps longer depending on the scope of the project, Winn says.

“The more definite your goals and the more you prioritize what you want to fix, the better your experience will be,” Bowers says. “Just saying, ‘We need more space’ is not as helpful as saying, ‘We have a huge dining room and living room that we don’t use, but our kitchen and family room is too small.’ ”

Bowers says that while it’s helpful for homeowners to consider ways they think something could be fixed, it’s also essential to be open to other solutions.

“Sixty percent of the time, the idea the homeowners have doesn’t make sense from a cost perspective or engineering,” she says.

Darren Robbins says the ideas he and his wife generated during discussions with several contractors were too costly, so they needed to trim back a few plans before finalizing their budget with Winn.

“When you’ve narrowed your choice to one or two contractors, ask some of their previous clients to tell you the three best things about working with that contractor and the three worst things,” Bowers says. “You may hear something like, ‘It took too long, but we saved a lot of money, and we loved the finished product.’ Then you can use your judgment about what’s tolerable.”

Robbins says that taking a long view of a renovation, even if it costs more money, is smarter than doing things one at a time, particularly with an older home that needs new wiring or other costly but essential items.

“It’s better to wait until you can do everything at once, because I wasted money on things that I ended up replacing a second time when we did the renovation,” he says.

Above all, if you want to remodel this spring or summer, take your time to plan carefully and be prepared for upheaval for at least a few months depending on the scope of the project. If you can’t find the house you love, consider a makeover for the one you already own.

Source The Washington Post