Even as home values continue to drop, homeowners continue to improve their homes. Yet one more piece of data seems to suggest that homeowners are becoming more optimistic about the future.
The Residential BuildFax Remodeling Index, a residential building and permitting database tracking 4,000+ cities and counties throughout the country, rose 18% year-over-year in 2010. After fourteen straight months of increase it reached a peak of 103.8 in December 2010, the highest December number in the history of the index, which started in 2004.
The increase comes at a time when more and more homeowners are underwater, making the financing of remodeling projects more difficult. “We believe many of these homeowners are drawing on their savings or other forms of consumer credit, such as credit cards to pay for the remodeling,” said Bruce Hahn, President of the American Homeowners Foundation. “Anecdotal evidence that most homeowners are opting for less ambitious projects than in the past supports this view,” he added. Another factor may be barriers to other alternatives. “In many markets it is very difficult to sell your home. Even if you can sell your home, financing its replacement may be a challenge because mortgage lenders have substantially tightened borrower requirements. If moving up isn’t an option, improving your current home may be the next best alternative.”
Homeowners need to be careful when selecting remodeling contractors. In good times and bad, complaints about remodeling contractors are near the top of both the Better Business Bureau’s and the American Homeowners Foundation’s complaint list.
There are a number of steps you can take to reduce risk. You should check the contractor’s credentials- carefully. Are they licensed and insured for workers compensation, property and personal liability? If in doubt, ask to see their insurance certificate. Do they belong to the National Association of the Remodeling Industry, the National Association of Home Builders Remodelers Council, and/or any of the more specific trade associations in the remodeling sector? That’s a sign of commitment to the trade and to professionalism. Most also offer certification and/or management training and keep their members up to date on the latest products and techniques. Ask for recent references on similar jobs (employee and subcontractor turnover is often fairly high, so recent jobs are a reliable indicator of their current capability). Check their record with the Better Business Bureau while you’re at it.
If you can’t get references on a particular contractor you’re considering using, consider looking elsewhere. There’s probably a very good reason you can’t get a reference!