Is It Time To Renovate?

I was having a conversation the other day with someone whose opinion I greatly respect. She thinks that we should be seeing a new boom in the home renovation / do-it-yourself space in the coming months and that well positioned firms such as Lowe’s and Home Depot could stand to benefit.

She also thinks it could be an interesting space to begin to capture via the Web.

Her logic was solid: Since so many of us are looking at plunging home values, and are more than a bit nervous about the stability of our income, this as a clear time to once again roll up our sleeves and improve our current living situations.  Since we can’t move to improve, we need to work to improve where we already are.

It makes sense. I’m just not so sure she’s entirely right.

No doubt most of us are suddenly re-evaluating out short term goals as far as housing is concerned. Coming up with the funds to move up is risky and difficult to come by at the moment.My concern is  that this time around that there isn’t going to be much capital to fuel the renovation work. At least not for a while.

Small scale improvements will continue as they always have of course. A $50 coat of paint to freshen up a room isn’t a huge stretch. A new shower curtain for the guest bath, found on sale, makes sense. However, the big projects, the projects that really give your space that sense of being new, like new flooring, a new pool, a major bathroom makeover, a new addition, the high dollar projects that really drive the home improvement business, are traditionally funded through home equity loans and second mortgages. That money is pretty hard to come by these days.  Heck, home equity is hard to come by these days.

Sweat equity still exists and is a proven concept for making our personal spaces feel special.  I’m just not sure that given the current state of the economy that it makes solid financial sense just yet.  Even if you can come up with the money, putting $40,000 worth of renovations into a home that has lost $100,000 worth of equity in the last 12-months because of the housing bubble, with more losses likely ahead, can get you burned.  And that is going to hold people back for a little while longer.

What do you think?

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Cover photo provided by wharman
Article photo provided by Qole Pejorian