The housing market boom of the late 90’s and early 2000’s has completely flat lined. People are no longer able to qualify for a new home loan easily and their finances have most likely tightened during their daily lives. Instead of searching for new homes to buy in better neighborhoods, they are accepting that they will be living in their current home for many years to come. The mentality has changed from new home buying to improving the home you already live in. The home remodeling industry is making a strong comeback and there are several factors that help explain the recent and future remodeling boom.

1. Stabilizing economy: The economy may not be making a full rebound, but it seems to be stabilizing and should remain somewhat constant through the next several years. People will regain trust in the economy and feel more comfortable spending money on larger projects such as home remodels.
2. Stable housing market: The major downward swing in the housing market and drastic increase in foreclosures over the past few years is now stabilizing. With fewer people losing their homes (thankfully) and more people purchasing affordable housing, there will be a larger market available for home remodels.
3. Age of houses: In higher income metro areas, the housing stock is older and the people living in them have the necessary income to make improvements. The higher value homes in high income metro areas will regain value faster than low income areas and provide the main area of growth for the home remodeling industry.
4. Increased spending: Since the economy seems to be stabilizing and people are showing new confidence in it by spending rather than saving more, they will now use their discretionary income to spend on improving their living conditions.
5. Job security: During the lowest point of the recession, many people were worried for their own job security. With a more stable economy, less people will be afraid of losing their jobs and will once again feel more comfortable spending money on housing projects. Without the fear of job loss looming over people’s heads, they can begin spending money on other things that will make their life more comfortable.
6. Necessary upgrades: Over the past several years people have been neglecting the home upgrades that are necessary for a comfortable level of living. The next several years in the home remodeling industry will have a large focus on the necessary upgrades that were neglected in the past.
7. Baby Boomer retirement: The Baby Boomer generation is beginning to retire and either find a home to spend the rest of their time at or improve upon their own. They will prepare for retirement and aging by spending money on upgrades to make their home as comfortable as possible.
8. Foreclosure repairs: The recent increase of buying, repairing, and reselling home foreclosures will create a large new market for the home remodeling industry. The foreclosures often need major repairs and renovations, adding to the home remodeling boom.
9. Energy efficiency: Despite the sluggish economy, going green is still a priority among the higher income, higher value home metro areas. Home renovations that will improve energy efficiency will continue increasing over the next several years, especially if the federal tax incentives remain intact.
10. Reduced housing mobility: Many people that are locked into long-term, low-interest rate loans will not easily be able to move and qualify for an equal loan. Their lack of mobility will result in them choosing to upgrade their homes rather than moving into a new home with a new mortgage and a higher interest rate.

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The unfortunate news for the housing development market in our struggling economy is turning out to be great news for the home remodeling industry. While one industry is fighting off bankruptcy, the other is helping families who cannot afford to buy new homes by fixing up the ones they already own. If you plan to remain in one house for the next five to ten years, you are likely to make it as comfortable as possible.

A recent study completed by Harvard University’s Joint Center for Housing Studies (JCHS) forecasts that “the next decade will yield solid growth and many new opportunities” for the home remodeling industry. The study describes several indicators that are pointing towards a steady increase in business for the remodeling industry.

Despite the forcasted growth, the remodeling industry is going through some changes. Instead of the large and luxurious home additions and remodels during the previous housing boom, people will be more cautious about spending their money. There will be a transition from the excessive house additions of the late 90’s to necessary remodels that will create a home that can accommodate the family for many years to come. When someone will be looking to make an investment in improving their home, it will not be directly related to increasing the resale value.

Trends show that people will be planting some roots over the next decade. There will be fewer new home purchases and frequent moving. Homeowners will still want to increase their quality of life, as they may have in the past by moving to a bigger and better home in a nicer neighborhood. The weaker economy has instilled a new mindset of saving as much money as possible and only spending it on necessary items and amenities. Typical projects for families with reduced household mobility will include roof replacements, HVAC system upgrades, energy efficient window replacements, and room expansions.

The home remodeling industry is not solely dependent on families without household mobility; it is also showing growth in several other categories. During the recession, many homes were foreclosed by the banks and left abandoned. These homes were gutted by the previous residents, thieves looking for copper piping, and even transients. Now that the economy seems to be slightly more stable, the owners who bought the foreclosed home for dimes on the dollar are refurbishing them and getting them ready for resale. The JCHS report showed that owners of foreclosed homes spend, on average, 15 percent more on home improvements than the typical homeowner. The sad, but true, story of thousands of people’s homes being foreclosed during the recession has created a new market opportunity for savvy homeowners and the home remodeling industry.

One often overlooked growth indicator for the home remodeling industry is the new emphasis on energy efficient and “going green” types of repairs and replacements. In metro areas with higher home values, people are increasingly replacing their older windows, roofs, appliances, heating and cooling systems with low-energy alternatives. Anything that involves saving energy and being more environmentally friendly is “in” right now. Despite the recession between 2009 and 2010, improvement projects that included green features increased from 25 percent to 28 percent. The steady growth in the industry is often attributed to the strong tax incentives and government subsidies for green residential projects.

With an economy that seems to be bouncing back, homeowners stay in one place, foreclosed homes needing repair, and a culture still focused on going green, the home remodeling industry is forecasted to bounce back in a huge way. With the new report released by JCHS, home remodeling companies can hang tough and have hope for a brighter future with strong growth over the next decade. The industry may have changed and the type of repairs people are spending their money on may be more out of necessity than before, but the growth is positive nonetheless.

Home Remodeler Screening Tips

Every consumer undertaking home remodeling deserves a high quality project that is completed on time and within budget.  A competent contractor not only will make the process easy for you, they will improve your quality of living, and at the same time increase the value of your home.

Here are 10 valuable tips to help you make an informed decision when you chose a contractor to remodel your home.

1.  Start by checking all the companies you are considering online at www.cslb.ca.gov and www.bbb.org. Google each company followed by “reviews” to see what other people are saying.   What seniors should know before they remodel.

2.  Only consider contractors who are licensed, bonded and insured. In California, contractors are not required to maintain general liability insurance. Choosing a company who cannot provide you with proof of general liability and worker’s compensation insurance puts you, the homeowner in serious risk if a worker gets injured or causes damages to your property.

3.  Everything should be in writing starting with a “scope of work”, which is the narrative part of the contract.  The plans, home improvement contract including start/completion time and scope of work document makeup the entire agreement.  If the scope of work is written clearly and concisely, with no gray areas, there should be no misunderstandings.

4.  California license law requires that homes built or remodeled prior to December 31, 1977 must be tested for asbestos and prior to 1982 for lead.  If any either of these hazardous materials are discovered, remediation must be completed by an independent firm who is properly trained and licensed.  You may want to insist that testing be completed before for you finalize the home improvement contract.  For more information click here

5.  Part of the contracting process should include you approving the construction plans.  Make sure you fully understand what is on the plan and what is excluded before signing off.

6.  If there are contract allowances, go out shopping to confirm the amounts are sufficient to purchase the caliber of fixtures and finishes you desire this will avoid costly over runs that lead to change orders.

7.  By California State Law, the following documentation must be provided to you by the contractor when you enter into a property improvement:  Home Improvement Contract, Notice to Owner form, Check Out Your Contractor form, California License Law Notice, Information About Commercial Liability form, Notice of Cancellation (2 copies)

8.  Most well established contractors would not ask for a down payment.  By California law, a contractor is only allowed a 10% down payment or $1,000, whichever is less.

9.  Check the payment schedule provided by your contractor to make sure there are milestones that require inspection tied to when you pay where possible.  There should be a 5 – 10 percent retention held until final inspection is approved and all punch list items are completed.

10.  You have the right to ask for proof that subcontractors and vendors are paid.  Demand lien releases at each stage before making the disbursement.

When it comes to building or renovating your home, you won’t get very far without the correct permits in place. It is essential that you acquire the right ones, not only under city law, but also for you and your family’s safety. (Image Source)

The city of San Diego regulates construction for the safety of all residents, as well as for the preservation of certain areas of this great county. Visit the City of San Diego website for more detailed information and guidelines on how to obtain the appropriate permits, or contact them at dsdweb@sandiego.gov.

What types of permits are there?

There are several different types of permits, based on the type of construction: structural, plumbing, mechanical, electrical and combination, which are generally obtained for single-family homes and other small projects. Most residential projects require a combination permit.

What types of construction require a permit?

Complete demolition, relocation of buildings, and new construction always require a permit, and they generally require a combination permit that covers the structural, plumbing, mechanical and electrical components of your project.  Certain types of renovations require permits.

What home improvements don’t require a permit?

Any superficial changes to your home do not require permits. If you are merely painting, or redecorating, permits are generally unnecessary. Fences up to six feet high, as well as platforms, decks, and walkways up to thirty inches high do not require permits. General plumbing, electrical, or mechanical repair work such as adjusting or replacing faucets, switches, and linings does not require a permit.

Minor work permits:

There are types of minor home improvements that only require permits, but can be issued easily through the Inspection Services Office. If you need to move an electrical outlet, or install a water heater, this is the type of permit for you. Contact the city’s Inspection Services Office at (858) 492-5070.

If you are planning to pursue a home improvement project, be sure to have a licensed design build contractor, architect or designer draft the plans for your project first.   With properly drafted and engineered plans the necessary permits can be obtained easily.  Your contractor should be responsible to call and pass all the required inspections.

Whenever beginning a construction project in San Diego, a number of permits must be required. Many homeowners are unsure as to when the permits are necessary, and what they are actually for. Here is a quick guide to San Diego Building Permits. (Image Source)

What are San Diego Building Permits?

Building permits are merely measures put in place to ensure the safety of residents. These permits are able to regulate construction, and make certain that homes and buildings will not cause harm to the residents. Due to the differences in climate and geography across the country, state and local governments are responsible for establishing the appropriate codes and guidelines for any construction project.  Some areas also enforce certain laws and permits in reference to energy conservation requirements.

After getting permits from the city, there are a number of procedures that must be followed. You may have to submit plans to the city that outline your construction and you will have to establish details regarding the type of construction.

What kinds of construction need a permit?

Most types of construction need some type of permit. All new construction requires a number of permits, and any remodeling or renovation projects that modify electrical, mechanical, structural, or plumbing of the house also require permits. From structural preparation for earthquakes, to protection against electrical fires, these changes should be made by home remodeling professionals, and do require permits.

How do I obtain a permit?

Some types of permits are considered over the counter, which means that you can obtain it in one trip. Others require you to submit plans and applications and then return to receive a permit. You can get a permit at the city’s Development Review Center, which is located in downtown San Diego.  If you are making small changes to your home that still require a permit, you can visit the city’s Inspection Services Office for rapid processing.

What is zoning?

Depending on the location of your home or new construction, zoning regulations may be addressed. City Council has approved maps stating how many residences or specific types of buildings are allowed in any given area. Different types of zoning regulations determine how large the houses are allowed to be in a certain area, or how many residences can be built there. If you want to build something that is not allowed in a specific zone, you may apply to the city council for an exception.

In San Diego there are planned districts that show the intention of the property in that area. Some projects may be long-term plants, so it is essential that you check zoning regulations and procedures before having your heart set on a certain home or addition.

What are the inspections?

Property owners are responsible for having inspections throughout the course of the building process. The type of construction will designate the inspections that are required. Most permits expire after 180 days if you have not scheduled inspections during that time. Your project will be considered in violation of city codes if your construction is completed without proper inspections within the time frame given. If this happens, you are able to apply for a permit extension and reactivation.