Is this a good time to remodel?

[psteach]

First, let me say great blog, and great commentators–smart and funny. I could spend all day reading the topics here–of course, I could also get fired.

Anyway, I had a question of the experts here that I hope is not too far off the topic of the housing market. Having given up our chances of affording a larger place in Encinitas, my wife and I have long considered adding a bedroom, bath, and redoing the kitchen–in other words, by definition, an expensive remodel. Inquiries of recommended contractors during the boom brought a chuckle and an offer to put us on the waiting list. I’m hoping that’s changed, but maybe not. Also, interest rates, especially on home equity loans, have really shot up and look like they will continue to rise.

Given that we would not be remodeling to sell immediately, and also that we have managed to live with our two kids in our three bedroom, two bath place for 9 years, we have some flexibility in timing, but remodeling would sure make life more pleasant when the in-laws visit. I was wondering what any of you thought about the timing of this remodel–now, later, or never? Is the market going to drop enough to make a move possible without the trouble of remodeling our current home?

Thanks for any thoughts.

[SD Realtor]

My advice, which is purely based on speculation and has no facts behind if, would be to wait if you can. As the housing market continues to cool, it would seem logical that associated businesses such as home remodel and construction will also grow more desperate. I bet those same contractors who laughed at you a few years ago may be a bit more accomodating now or will be as time goes on.

SD Realtor

[SD Realtor]

My advice, which is purely based on speculation and has no facts behind if, would be to wait if you can. As the housing market continues to cool, it would seem logical that associated businesses such as home remodel and construction will also grow more desperate. I bet those same contractors who laughed at you a few years ago may be a bit more accomodating now or will be as time goes on.

SD Realtor

[NotCranky]

Things are going to be slow here tonight so you might want to bump your thread up a couple of times in the next few days.
BTW I am a contractor with a RE license. Someone else on another thread alluded to the possibility that it would be more of a buyer’s market regarding remodels and it can be. I know when I need subs, it has been way easier on the house I am finishing now verses the last house I built.I had an aquaintance call me and say he would do all the tile work just for the cost of the labor for his crew.This is a good guy too.
If you have a small yard, an addition can hurt you ,going second story is much more expensive and you really want a good contractor for that.

I also feel it is risky to put too many eggs in a basket right now. So if you don’t just have lot’s of cash around think twice about dumping money into a house(or using any credit). I have a friend who is in a similiar position as you find yourself in. I asked him to think about holding off on major upgrades to see where things go. He has a house which is not his “Destination house” and remodeling and adding on isn’t going to make it be that way. I suggested to him that he leave it as it is and consider having it be a rental for retirement and using his buying power to get the house he wants if prices drop considerably.

If you decide to make do with what you have you might consider a cheap unpermitted garge conversion that can be undone easily or a second hand travel trailer. The kids could sleep in the garage only when you have guests or the guests could sleep in the travel trailer.(I understand many people don’t want a travel trailer on the property)

That is of course just one take on it. Feel free to ask me any questions.

[NotCranky]

Things are going to be slow here tonight so you might want to bump your thread up a couple of times in the next few days.
BTW I am a contractor with a RE license. Someone else on another thread alluded to the possibility that it would be more of a buyer’s market regarding remodels and it can be. I know when I need subs, it has been way easier on the house I am finishing now verses the last house I built.I had an aquaintance call me and say he would do all the tile work just for the cost of the labor for his crew.This is a good guy too.
If you have a small yard, an addition can hurt you ,going second story is much more expensive and you really want a good contractor for that.

I also feel it is risky to put too many eggs in a basket right now. So if you don’t just have lot’s of cash around think twice about dumping money into a house(or using any credit). I have a friend who is in a similiar position as you find yourself in. I asked him to think about holding off on major upgrades to see where things go. He has a house which is not his “Destination house” and remodeling and adding on isn’t going to make it be that way. I suggested to him that he leave it as it is and consider having it be a rental for retirement and using his buying power to get the house he wants if prices drop considerably.

If you decide to make do with what you have you might consider a cheap unpermitted garge conversion that can be undone easily or a second hand travel trailer. The kids could sleep in the garage only when you have guests or the guests could sleep in the travel trailer.(I understand many people don’t want a travel trailer on the property)

That is of course just one take on it. Feel free to ask me any questions.

[Bugs]

I’d tell you not to do it.

I’m an appraiser and I’ve seen lots of properties with additions over the years. From a valuation standpoint, there is a point of diminishing returns. Unless many of the homes around yours’ have such additions it’s very rare for an addition to add enough value to completely cover the costs. There are a few exceptions, but in those exceptions it tends to be the site that makes it worthwhile – the primary example being oceanfront neighborhoods.

The other thing to consider is the stress that’s involved with such projects. Over the years I’ve seen a lot of divorces brought on by remodel, addition and spec home projects. Many people can’t handle having their lives turned upside down for 6 months or more, and these projects seldom get finished on time or within budget.

Not only that, but these projects seldom turn out as well as originally envisioned.

If you want the bigger/better house I’d recommend going and getting what you want. That way you know exactly what you’re going to end up with. Lots easier and (usually) lots cheaper.

[Bugs]

I’d tell you not to do it.

I’m an appraiser and I’ve seen lots of properties with additions over the years. From a valuation standpoint, there is a point of diminishing returns. Unless many of the homes around yours’ have such additions it’s very rare for an addition to add enough value to completely cover the costs. There are a few exceptions, but in those exceptions it tends to be the site that makes it worthwhile – the primary example being oceanfront neighborhoods.

The other thing to consider is the stress that’s involved with such projects. Over the years I’ve seen a lot of divorces brought on by remodel, addition and spec home projects. Many people can’t handle having their lives turned upside down for 6 months or more, and these projects seldom get finished on time or within budget.

Not only that, but these projects seldom turn out as well as originally envisioned.

If you want the bigger/better house I’d recommend going and getting what you want. That way you know exactly what you’re going to end up with. Lots easier and (usually) lots cheaper.

[JJGittes]

I second Bugs, unless you have 900sf in Birdrock on a big lot that you want to turn into your dreamhome, it’s not worth the stress and expense. Sit tight, and buy what you want when you are comfortable with the state of market. Just remember though that when the market bottoms for your move-up house, it’s probably bottoming for your house too….thus unless there is a market timing rental in between, except for a little larger tax bill, it’s six in one — half dozen in the other, if you are just rolling over your equity…

[JJGittes]

I second Bugs, unless you have 900sf in Birdrock on a big lot that you want to turn into your dreamhome, it’s not worth the stress and expense. Sit tight, and buy what you want when you are comfortable with the state of market. Just remember though that when the market bottoms for your move-up house, it’s probably bottoming for your house too….thus unless there is a market timing rental in between, except for a little larger tax bill, it’s six in one — half dozen in the other, if you are just rolling over your equity…

[NotCranky]

I agree with your recommendation too bugs. I came to the same suggestion, more or less. I am very greatful for the no nonsense angle you bring to these topics.

Your version just sounds so hard core. Houses are soft and fuzzy Bugs :). We like to tinker with them:).They are special and we leave our artistic and spiritual touches on them. They are the scrap books of our lives.

[NotCranky]

I agree with your recommendation too bugs. I came to the same suggestion, more or less. I am very greatful for the no nonsense angle you bring to these topics.

Your version just sounds so hard core. Houses are soft and fuzzy Bugs :). We like to tinker with them:).They are special and we leave our artistic and spiritual touches on them. They are the scrap books of our lives.

[CAwireman]

Psteach,

No one can answer your ultimate question – What’s the market going to do?

You have to base your decision on what you believe it will do.

Your choices, among others, might be:

1) Sell your house (after 9 years you ought to have some equity) and rent a 4 or 5 bedroom place until you can buy a larger home. Invest your gains in CDs until you find a place. Don’t waste it on cars or other things…..

2) Do nothing and deal with limited space. Your kids will eventually grow up and move out leaving you with more space. Foot the bill for a nice hotel for visiting parents, let other visitors pay for the hotel themselves. Or, let them sleep in the living room on roll-away beds, or whatever if they are willing to. I like this choice, but I’m cheap and don’t care if people know it. 😉

3) Remodel and enjoy the extra features. Realize that it won’t boost the resell value much if at all. It will be a warm fuzzy feeling that benefits you and your family, but won’t be something you can capitalize on otherwise.

4) You could also move out of your place, rent it to someone else, and rent a larger place. This preserves the ownership in your existing home, but gives you the benefit of a larger living space. And you could conceivably do it for no additional cost if you get a good deal on a 4 bedroom rental for yourselves….

Good luck and congratulations on having been in a house for 9 years, and not being subject to concerns of recently purchased property, or having to wait out the RE bubble to buy in the future.

You are in an eviable position, so don’t make a hasty decision, and don’t overlook options like 2 or 4 above. Avoid squandering your solid standing as other greedy or erratic folks have done. Good luck PSTeach!

HiggyBaby

[CAwireman]

Psteach,

No one can answer your ultimate question – What’s the market going to do?

You have to base your decision on what you believe it will do.

Your choices, among others, might be:

1) Sell your house (after 9 years you ought to have some equity) and rent a 4 or 5 bedroom place until you can buy a larger home. Invest your gains in CDs until you find a place. Don’t waste it on cars or other things…..

2) Do nothing and deal with limited space. Your kids will eventually grow up and move out leaving you with more space. Foot the bill for a nice hotel for visiting parents, let other visitors pay for the hotel themselves. Or, let them sleep in the living room on roll-away beds, or whatever if they are willing to. I like this choice, but I’m cheap and don’t care if people know it. 😉

3) Remodel and enjoy the extra features. Realize that it won’t boost the resell value much if at all. It will be a warm fuzzy feeling that benefits you and your family, but won’t be something you can capitalize on otherwise.

4) You could also move out of your place, rent it to someone else, and rent a larger place. This preserves the ownership in your existing home, but gives you the benefit of a larger living space. And you could conceivably do it for no additional cost if you get a good deal on a 4 bedroom rental for yourselves….

Good luck and congratulations on having been in a house for 9 years, and not being subject to concerns of recently purchased property, or having to wait out the RE bubble to buy in the future.

You are in an eviable position, so don’t make a hasty decision, and don’t overlook options like 2 or 4 above. Avoid squandering your solid standing as other greedy or erratic folks have done. Good luck PSTeach!

HiggyBaby

[temeculaguy]

I was in the same boat about 11 years ago, my 1300 sq ft 3/2 was fine for a young couple when I bought it in 1991 but after having two babies it was cramped. The contractors were dying for work in 1996 so I had some great quotes at about cost and I had a big lot. Having purchased in 1991 I was upside down so I couldn’t sell even though my income had doubled and I could have afforded to move up if the market had been cooperative. The problem was exactly what the others mentioned, room additions would have made the floor plan choppy, the stress of contractors in the home and the delicate nap/sleeping schedules of a 1 and 3 year old would have required a family size bottle of valium to survive construction and it would have limited my ability to be in a financial position to move up when the market changed.

What I did was stick it out for another two years, just as the market returned to 1991 prices (1998) I sold my house for what was owed including sales costs but forfeited my down payment, bought another house exactly twice as big in a better area for 50k more, almost what the addition would have cost.

[temeculaguy]

I was in the same boat about 11 years ago, my 1300 sq ft 3/2 was fine for a young couple when I bought it in 1991 but after having two babies it was cramped. The contractors were dying for work in 1996 so I had some great quotes at about cost and I had a big lot. Having purchased in 1991 I was upside down so I couldn’t sell even though my income had doubled and I could have afforded to move up if the market had been cooperative. The problem was exactly what the others mentioned, room additions would have made the floor plan choppy, the stress of contractors in the home and the delicate nap/sleeping schedules of a 1 and 3 year old would have required a family size bottle of valium to survive construction and it would have limited my ability to be in a financial position to move up when the market changed.

What I did was stick it out for another two years, just as the market returned to 1991 prices (1998) I sold my house for what was owed including sales costs but forfeited my down payment, bought another house exactly twice as big in a better area for 50k more, almost what the addition would have cost.

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