It's Time To Move, Or Should We Remodel?
By Rachelle Garbarine
Having outgrown their four-bedroom colonial on a two wooded acres with a pond in Warren Township some time ago, Joanne and Jim Robb have spent the last two years hunting for a larger home with as pleasant a rustic lot elsewhere in the community. They have been unsuccessful.
"We want to stay in Warren because we are rooted here, part of the community," said Mrs. Robb, whose husband is an analyst on Wall Street. "But there's not much out there with the kind of property we now have unless we go up to the millions."
The Robbs, who have four children, are considering whether to stay put and remodel to give them the extra space they need. Mrs. Robb said she and her husband were thinking of building an addition or perhaps even razing the old house and building a bigger one.
"We have to do something soon", Mrs. Robb said, "because the house is closing in on us."
The decision the Robbs are facing - move or remodel - is one that most homeowners grapple with sooner or later. And many are choosing to turn their houses over to architects and remodelers. In the process, they are spending about a third as much as they would in building new homes. They are choosing to remodel for several reasons. Some who intend to sell their homes are typing to make them more marketable. Others, who want to stay or cannot sell are making them more livable or adjusting to increasing family size. And recent buyers are adapting their new homes to their needs.
In the process, owners are often adding value to their homes according to real estate brokers, remodelers, appraisers and homeowners. Though the sluggish housing market and slow economic growth have affected remodeling activity, it has not been severely hurt as new-home construction, they added.
"There are more large renovations going today than there were during the depth of the recession," said Wendy Jordan, editor of Remodeling Magazine in Washington.
The State Department of Labor says that $625.5 million was spent in remodeling in the peak home construction year of 1986 and $807.2 million in 1993, the latest data available. That compares with a drop from $3.61 billion to $2.32 billion in new-construction spending. And remodeling's share of the total cost of construction increased to 25.8 percent in 1993 from 14.7 percent in 1986.
Generally people remodel to increase their own comfort or to "maximize their investment," said Bruce L. Carlin, president of Carlin Appraisal Service in Basking Ridge.
Though remodeling is costly - about $100 a square foot - it is still less expensive than moving and often homeowners have strong ties to a neighborhood, said Barry Poskanser, a Ridgewood-based architect. it also makes the house more salable, he said.
A recent report by the American Bankers Association in Washington showed that financial institutions in 1993 issued $72.7 billion in home equity loans and little change is expected this year as lower interest rates help keep activity level. The largest share of that sum, 37 percent, was used for home improvements, 36 percent for debt consolidation and the rest for car, tuition or medical bills.
Gopal Ahluwalia, director of research at the National Association of Home Builders in Washington, said projections were that remodeling "will remain steady and begin to grow through the rest of the decade and into the next century." he added that "people still think that owning a home is good investment so they add amenities and make repairs to keep its value."
Baby boomers, more than half of whom own homes, will help drive the remodeling industry, Mr. Ahluwalia said, noting that people are staying in their homes longer. The housing stock, particularly in the Northeast is also aging and owners of older homes will refurbish them to keep pace with changing designs he added, noting that the number of bathrooms in homes has grown from 1.5 in the 60's to 2.5 or 3 today. At the same time, the average home size increased from 1,500 to 2,100 square feet.
Tutta and Hanns Heiliger remodeled the ranch they have lived in for 12 years on one acre in Allendale. 'We needed more space and never considered moving because we feel we have a good piece of property and we like the neighborhood," said Mrs. Heiliger, a part-time language instructor; Mr. Heiliger is a banker in New York City.
The year long $250,000 renovation expanded the Heiligers' cramped 30-year-old ranch by 1,300 square feel to 4,500. That included a wing off the back of the house for two large bedrooms to give their teen-aged sons more privacy. It also has a laundry room, bathroom and home office.
The two original bedrooms were pushed out to add more space for an expanded living room and dining room as well as a library. The basement was also opened up and connected to the living room by an open staircase.
'Even though we probably could have made more money b selling the house as it was, Mrs.. Heiliger said, "we feel that everything we added has added value to the house."
But a renovation project can turn into a disappointment if homeowners expect remodeling to pay for itself on the sale of the property.
In a 1994 survey, Remodeling Magazine listed the renovation projects offering the highest return on investments in the first year it is completed. Among them are a bathroom additions which would bring in a 98 percent return on investment which an upgraded one would generate an 86 percent return. And a remodeled kitchen would yield a 95 percent return while minor changes like adding new surfaces would garner a 104 percent. Meanwhile, home offices, a new item surveyed, would bring in only a 59 percent return.
Industry analysts offer some general guidelines for homeowners planning major renovation projects.
Bryan Patchan, Executive Directory of the Remodelers Council of the National Association of Home Builders, said that unless an owner planned to move soon the project should be done to please the owner and not the next buyer. After that, he said, owners should think of protecting their investment and keeping the house and its improvements comparable with the values of neighboring houses.
Mr. Carlin, the appraiser, said the remodeling investment should not bring the value of the home more than 10 to 15 percent above the median sales prices in a neighborhood for the last two to three years. "You never want to have the most expensive house on the block," he said.
