Move out, or fix up?

Expansion: Acquiring additional space is one of the principal reasons for remodeling the current home.

November 18, 2001|By Nancy Jones-Bonbrest | Nancy Jones-Bonbrest,SPECIAL TO THE SUN

When Jim and Holly Robinson and their 1-year-old daughter, Kaylee, moved into their new home, it was perfect.

But after three years and two more children, perfection became a little cramped. Living a bit cozier than they wanted, the Robinsons decided it was time to remodel and enlarge their Lisbon home.

"We knew we didn't want to move out of the area; we love the neighborhood and our neighbors," Jim Robinson said. "When we moved into this house, at the time, we considered it huge. Then with two more kids, we were left wondering what happened to the big house we were in."

Taking advantage of a low-interest home-equity loan, the Robinsons added a fifth bedroom, enlarged the family room and expanded their deck.

"We knew we wanted to enlarge the family room. It just seemed too small, and that's where we spend most of our time in the house," he said. "So we thought, while we are doing that, why not just add another bedroom above?"

Unlike the Robinsons, Mac and Anne MacLure didn't outgrow their house.

It was always in the MacLures' plans to expand their home by adding another bedroom. But during the seven years that they've lived in their home, it became apparent that they could do even more with the house than just add a bedroom.

So they hired an architect to draw plans for adding two bedrooms, three full baths, a home office and a mudroom. They also sought to convert their garage into an expanded kitchen and dining room and wanted to build a new semidetached garage.

But then came the estimates, which were double their budget. And the MacLures realized that moving might well be more practical.

"So we started looking at new houses and basically what we found was that we had [already] created this house that would be perfect for us on paper," Anne MacLure said. "And even though it meant that it might be less expensive to move, we decided we wanted to stay here. So we decided to bite the bullet and figure out financially how we would handle it."

They asked their architect to make plans that could be phased in over five years and asked contractors who were bidding on the project to eliminate parts of the plan that might be done at a later time. In the end, only the remodeling of the master bath was put on hold.

At one time or another, most homeowners have to decide whether it makes more sense to move or to remodel. Factors that typically are part of the decision include affection for the existing location, the feasibility of the remodeling job and the costs involved.

In today's market, as the economy continues to take a downturn, consumer confidence becomes another important factor in the decision.

Historically, when there's a slow economy, it means more people will make the same choice as the Robinsons and MacLures and decide to remodel instead of move.

"Consumer confidence has obviously been affected by the events of Sept. 11," said Gene Lugat, senior vice president of AccuBanc Mortgage Corporation in Columbia and president of the Maryland Mortgage Bankers Association. "And it is affecting people's desire to move."

With low mortgage rates that are hovering around 6.5 percent and home equity lines of credit tied to a 5 percent prime rate, the mortgage banking industry has seen a tremendous upturn in consolidation loans. How that eventually affects the remodeling market is yet to be seen, Lugat said.

"We are so thick in the refinances right now we can't see the forest through the trees. We are not really seeing a pick-up of volume on the remodeling side," he said. "But historically, over periods of a tougher or slower economy, remodeling and rehabilitation loans tend to be driven up. So when the economy starts slowing down, we start seeing people investing in their home."

Even before the terrorist attacks of Sept. 11 rattled the economy, the remodeling industry was moving forward.

Residential remodeling expenditures increased 7 percent last year compared with total expenditures in 1999, according to the U.S. Census Bureau. Total spending reported for all residential properties rose to $152.9 billion, compared with $142.9 billion in 1999.

And while the maintenance-and-repair portion of the market held virtually steady in 2000, other expenditure areas increased.

Additions and alteration projects, which include popular jobs such as kitchen and bath renovations as well as room additions, increased by nearly $6 billion over the previous year, to $77.9 billion.

Expenditures on major replacements that cover window, roofing and siding installations and replacement of major housing systems such as furnaces and air conditioning, increased by 15 percent or a little more than $4 billion, to $32.8 billion, last year.

Locally, the remodeling industry has benefited as well.

The dollar amount of remodeling activity in the Baltimore region was $74.6 million in the second quarter of 2001, up 13.7 percent from the second quarter of 2000, according to the Baltimore Metropolitan Council.

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