Remodeling Looks Like a Bargain as Rates Fall

Prices are falling on building materials and on contractors’ fees, and that’s reflected in a 12 percent drop in consumer spending on home improvements, according to Harvard’s Joint Center for Housing Studies.

"It's hard for home owners to think about spending on their houses when real estate values are falling," says Kermit Baker, a senior research fellow at Harvard. "But with contractors hungrier for business, you'll be able to negotiate better prices, win other concessions and hire better-quality contractors than you could a year or two ago."

In Remodeling magazine's most recent study of returns on remodels, home owners recouped about two-thirds of their costs on a typical home improvement if they sold their home within a year after completing the job. That compares to 87 percent in 2005 at the peak of the housing boom.

Source: Money, Donna Rosato (12/01/08)