If weather conditions permit, or if it's an inside job, don't wait for the spring to improve your home. It's a good time to remodel, especially if the work is lumber intensive.
Lumber prices are down from last year and well off peak levels from two years ago. The cheaper material prices come at a time when demand for remodel work is waning, but the supply of contractors is increasing with refugees from the home building industry.
Given the market factors driving the trend, you could safely gamble material prices will continue to slide in the spring, but there is some risk there won't be enough contractors to go around when seasonal building resumes.
"I agree. It is a better time to remodel," says Dan Fritschen, publisher of Sunnyvale, CA-based RemodelOrMove.com, a website for fix-it-up-or-buy-something-else challenged home owners.
"The positive aspects are that housing prices are down somewhat (both the one people are in and the ones people want to move to), the materials pressure from the hurricanes (Katrina and Rita) has slackened, so materials are less expensive," said Fritschen.
Wood products industry information source Random Lengths said its "Framing Lumber Composite Price" (a weighted average of 15 key framing lumber items' prices listed in dollars per thousand board feet) was $275 in November this year, down more than 30 percent from November 2005.
The latest figure is also more than 41 percent down from the housing boom peak of $473 in August of 2004 and more than 43 percent down from the older $487 peak in July 1999.
Another measure, Random Lengths' "Structural Panel Composite Price" (a weighted average of 11 key panel items' prices in dollars per thousand square feet) came in at $269 in November of 2006, down from nearly 27 percent in November of 2005, when the figure was $368. The current dollar amount for panels is down a whopping 55 percent from the $598 peak, which occurred during the housing boom in April 2004.
"With home prices down, home owners are feeling 'less rich' with less equity and are therefore more hesitant to pay any price to get it (home improvements) done, which means less work for contractors, which means they are more eager to be competitive in their pricing," says Fritschen.
Nationwide, home owners spent $160.6 billion in home improvements over the past year ending in the third quarter 2006, down from the $170.1 billion remodeling boom peak level which occurred during in the first quarter this year, according to the "Remodeling Activity Indicator" (RAI), tracked by Harvard University's Joint Center for Housing Studies.
Some of the reduced consumer expenditures is related to cheaper building materials, but some of it is also due to cash-strapped home buyers who recently purchased and don't have money left over or enough built-up equity to tap for home improvements.
"The negative aspects are interest rates are up compared to a few years ago, which makes getting equity out to do the remodel more expensive," said Fritschen, also a remodeling instructor who is beta testing a new building calculator website RemodelEstimates.com. The site helps do-it-yourselfers estimate costs for remodel jobs by the project, by the room or whole house jobs.
While interest rates could be a stumbling block for some, most cost factors in the home improvement market are so compelling, home owners could be lulled into a wait-and-see position.
"In recent quarters, the remodeling indicators have been mixed. In the third quarter, however, all of the components of the RAI point to either slower growth or decline. This suggests that the industry has not yet hit bottom, so we should see a further slow down in the coming quarters," said Kermit Baker, director of the Remodeling Futures Program at Harvard's Joint Center.
That might not be the best strategy says Cincinnati's Tim Carter, master contractors and publisher of the AskTheBuilder.com website.
"There are ways to do remodeling jobs in the winter. Contractors can't be out of work for three months in the year and good guys know how to do it with minimal disruption and without the materials getting hurt," in any weather, Carter said.
For those who insist on holding out for the spring, "Put in a bid now and get in line to be the first job in the spring," he added.
Due diligence, however, is necessary in any market.
Carter said some of the market swing in home improvement buyers' favor is due to home building workers moving over to home improvements and that's pushing prices down by creating a hefty supply of contractors when there's less demand.
"The guys who do new construction are not always qualified to do remodeling. They are different. More so now than ever, you need to be able to verify that they are indeed a remodeling contractor and can prove they've done a number of jobs over the past five years," Carter said.
In addition to hiring reliable, licensed professionals, Carter says to be sure to examine work the contractor has completed during three time periods -- recently, within months; work completed in the last two years and work that's five years old.
"For work recently completed, ask the client if the contractor showed up on time, if there were delays, if the subcontractors were cavemen. Work from two years ago is fresh out of warranty. Ask if there were any warranty claims and how they were handled. For older work, see how well the work has held up, if there were any surprises, if they would hire the same contractor again," Carter said.
"If you do your due diligence, it will pay off," he added.
