The word was slow to get around but homeowners are now beginning to see that the time is ripe to remodel. Deep discounts are very tempting and some homeowners who fear a worsening economy are taking the risk and taking advantage of great deals.

Many homeowners who received remodeling bids a year ago are finding that the same project today would cost thousands less.

Take for example Michael Perkocha and Tina Stott from Oakland, who just purchased a bungalow for $630,000. Last year they were getting quotes in the $250,000 range and decided to postpone remodeling because they couldn’t afford it. This January they got quotes ranging from $102,000 to $170,000 and ended up going with a contractor whose bid was $129,000. That’s a $121,000 savings!

Such deep discounts allowed them to upgrade their flooring from laminate to oak and upgrade their countertops from Formica to granite. They’re also able to add crown moldings and energy efficient windows.

Besides saving a huge chunk of money, the work is almost complete at three months, opposed to the six months they had figured on, and they’re under budget. These are huge marketing points for contractors: big savings, ahead of schedule, and under budget. (more…)

A recent Money Magazine article put an apt spin on today’s remodeling market. First the good news, the cost of materials are falling rapidly and bringing down the cost of remodels themselves. This bodes well in that homeowners, who may not be able to sell their house in the present market, can at least get the best price on those much-needed renovations they’ve been putting off. This could mean some work for contractors yet. And a good selling point for convincing on-the-fence homeowners to go for that remodel now rather than later.

But there are two big downsides. One, the pool of contractors looking for work is growing steadily and driving down prices further. Two, that means profit margins are slimmer and contractors who get the go ahead may have to do more work for less money.

But it is work.

While the article in Money Magazine is geared toward homeowners, there are some important lessons for contractors as well. Mainly getting to know the homeowner in today’s market. Even those with the means to put on a new roof or expand the master bedroom are thinking twice about it. For a few reasons:

• the return on investment is at a low point in the current housing market
• the future is incredibly uncertain

Fortunately, however, there are more reasons why homeowners who can, should remodel:

• material costs are falling fast (especially for oil-based products such as vinyl, asphalt)
• smaller, necessary “fix-ups” still need to be done
• increased competition means lower prices, more concessions
• putting money into the home now, while costs are low, will help the home maintain its value

Still, it’s a very touchy game on all sides. Contractors desperately need work, homeowners still need or want upgrades, but the housing market is not finished declining. It is therefore very important that homeowners understand which projects will have the best return on their investment and will likely be meticulous about choosing a project and a contractor, as the Money article itself encourages. (more…)