Jayson Gibson :: Now that We Have Some Time . . . Remodeling is a No Brainer

aka . . . Recession, Depression, Regression, Revision… What’s the Big Deal?

Sure, things are crazy out there—stomach-churning rollercoaster rides in the stock markets, vitriolic and dire debt debates in Washington—and everyone’s wondering where the economy is headed. Housing, eternally bound into a peculiar love/hate relationship with the economy, was long thought to wear the pants in that dynamic, but it’s become clear that homebuyers and homeowners are the ones reigning over the house of pain in which both the economy and real estate are residing. And for most of those people I have one question: What’s the big deal?

So you own a house, and you want to renovate, but the rocky economy has you wondering whether or not you’re throwing good money after lost equity. But there’s one factor you may have missed. If you’re lucky enough to have that greatest of luxuries—time—then making the move on a home renovation is a no-brainer. Cost-basis for renovations is relatively low now, whether you go pro or DIY. Are the rises in materials costs making things more expensive? Sure, although one has to balance that against the slack in demand generated by the building slowdown. And those contractors? Some are struggling to find work, and that age old give-and-take of supply and demand means that their prices are falling, too. And if another recession really kicks into gear, it won’t be long before retailers go back to wooing consumers with deals and deep discounts.

If you make your renovations and the economy (and the housing market) get worse, you’re stuck relaxing in a home that meets your functional and aesthetic needs, and you’re probably recouping savings every month to boot (you did go energy-efficient with that renovation, right?). Your long-term horizon for selling your home means that regardless of its value, your house is your home, and you’ve made it a better place in which to live. How can that be wrong? On the flip side, if you make your renovations and things suddenly get hot, well, you’ve got an upgraded and highly-marketable product on your hands, and you’ve recouped your expenses in increased equity. Not a bad job.

For people looking to buy a home, the same principles apply. Whether they’re looking at used homes or new houses, they’re worried about falling values. Yet when you stop and ask these same potential homebuyers whether they think home values will rise over the next ten or fifteen years, they invariably say “yes.” There it is again: time. Time spent in a home does what it’s supposed to do: allow the owner to accumulate equity in their property. If one isn’t anxious to buy and flip a home for instant profit, and is instead looking for a roof to put over themselves and their family, why such concern about where housing prices move over the next few years? And if property values go up? Well, no one would have a problem with that.

The truth is that once the hint of a double-dip recession is in the air, it’s nearly impossible to pull that hint back without it taking a hit on the confidence of consumers, employers, workers, and retailers. Those buyers and owners who can step-back and see that a house is just a shell meant to be a home, will focus on the values that really matter, instead of squinting into a Zillow page worried about the peaks and valleys on a graph. And lucky for them, since right now, it seems like homebuyers and homeowners with long term horizons can do no wrong, as long as they dip their toes back into the pool and start re-engaging with real estate.

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Note for the hosts:  Some smart thinking here from Jayson Gibson.  Thanks Jayson! Jayson Gibson is co-founder of NewHomesSection.com and was referred to me by past poster Paul Escobedo.  I just think this is a darn good post here, and I am certain he would appreciate a comment down below.  Happy reading.  ~jb