Finishing Touches

A basement remodel may be the best way to expand living space in a tight economy

November 23, 2008|By Nancy Jones-Bonbrest | Nancy Jones-Bonbrest,Special to The Baltimore Sun

With housing prices down, mortgage loans tougher to come by and unemployment rates rising, homeowners are increasingly deciding to stay put and make do with what they have.

But when what they have isn't enough, many homeowners are looking down instead of out when it comes to finding additional space.

With basement remodels costing about half the price of an addition and offering a high resale value, home building experts say finishing a basement can be just the right option when it comes to expanding the size of a home.

It's also a choice that could gain momentum even in today's slumping housing market and outpace other home improvement projects, market researchers say.

Having moved into their new Jarrettsville home five years ago, Todd and Michelle Levey decided recently it was time to finish their basement. The couple wanted a place their children, ages 6 and 8, could retreat to with their friends, games and toys.

"It's not really a space issue. They're getting older and we wanted a place they could go to and hang out," Michelle Levey said.

Although still in the process of interviewing contractors and settling on a design, Levey said essentials include an open great room, kitchenette, laundry room, bathroom and game room. Their targeted budget is $40,000 to $50,000.

Donald Lynch Jr., president of Lynch Construction in Churchville, is working with the Leveys in developing a design. He said determining a budget is the first step in finishing a basement.

Make "sure the client's budget is going to make the project happen. It really depends on what they want in it and the finishes," said Lynch, who serves as the president of the Remodelers Board of Directors for the Home Builders Association of Maryland.

A basement remodel in the South Atlantic region of the country, which includes Maryland, will cost homeowners an average of about $53,500 with a resale value of just over $43,000 or 80.9 percent, according to Remodeling Magazine's "Cost vs. Value Report" for 2007.

Lynch said the design of the basement is extremely important. Homeowners must take care in correctly optimizing the space. Opening up the stairway, creating the right light and a strategic color concept should all be part of the design.

"Open and airy is what we try to push," Lynch said. "That's the way most people live nowadays."

With more than 27 million full basements and 9 million partial basements in the U.S., according to the Census Bureau, the basement finishing market could fare well in an otherwise slumping economy.

Market research publisher SBI forecasts the basement finishing market to grow 5 percent in 2008 to $23.3 billion and remain at a steady 7 percent through 2012 to $30.6 billion, according to its "Trends and Opportunities in the U.S. Basement Remodeling Market" report released this month.

"Although the data shows that remodeling expenditures are down, there seems to be a number of indicators that showed that might not hold true for basements," said Edna Gabler, author of the report.

For homeowners who decide to expand rather than sell in the declining market, finishing a basement is a good stopgap measure, she said.

Although SBI analysts say it's counterintuitive to expect this market to do well in the current housing and economic downturn, they point to the fact that the basement finishing market had a "compound annual growth rate of 21 percent between 2005 and 2007 (going from $15.1 billion to $22.2 billion) even as the housing market was taking a nosedive and overall expenditures for home improvement declined slightly."

New innovative products in waterproofing, mildew and mold control have lessened homeowner concerns about water issues and are also expected to fuel growth in the market, according to SBI. The emergence of basement finishing systems, such as the one offered by Owens Corning, where drywall and wooden studs are replaced with inorganic system panels, are gaining ground in the marketplace.

"About 98 percent of basement remodeling is still done by drywall and stud companies. But others have emerged," Gabler said.

Water issues need to be dealt with before work on a basement can start, caution experts. There are many companies that specialize in waterproofing basements. Outside drainage issues, often easy to correct, should be looked at first.

Musty and damp smells often associated with unfinished basements can sometimes just be a lack of good air circulation, which would be corrected once the room is finished and ductwork is added.

Experts also advise making sure the remodel of a basement is up to local building codes early in the planning stages. If a bedroom is part of the plan, an emergency escape such as a door or large window will need to be incorporated into the design.

Even after any water issues and other possible problems are dealt with, Chicago basement expert and owner of Basement Spaces, Dave Schrock, suggests homeowners install a good backup battery-operated sump pump and make sure the proper insurance is in place.

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