No doubt about it, the U.S. housing market is hitting the brakes hard. In its latest release, The National Association of Realtors (NAR) stated its Pending Home Sales Index, based on signed contracts, fell 10.2% to 79.5 in September.
With high-interest rates tamping down homebuying activity, Americans who otherwise may put their homes up for sale may wind up staying put.
But that doesn’t mean they won’t be active.
More real estate experts say that given the slowdown in homebuying activity, homeowners will take the opportunity to build more value into their homes by engaging in major remodeling and renovation projects.
“With the recent rate hike, we have seen a slowdown in new construction of residential homes. When this happens people tend to stay longer in their current houses and spend money remodeling or rebuilding it,” said Constructo chief executive officer Yuri Galeev.
Another issue vexing potential buyers is that even the cost of buying a fixer-upper has gotten out of hand.
“As more and more people become interested in “fixer-uppers”, the cost of purchasing a run-down home is on the rise,” said The Luxury Pergola’s co-founder and real estate expert Stacy Elmore. “This means that people are starting to see more value in renovating their current homes than in buying a new one.”
Additionally, technology has made it easier than ever for homeowners to complete do-it-yourself renovations themselves.
“Home improvement stores like Home Depot and Lowe’s now offer online tutorials on how to complete various projects, and there are countless YouTube videos that can teach you everything about remodeling a home, “ Elmore told TheStreet.
Getting the Best Deal From a Contractor
Homeowners getting ready to dive into a home renovation project should read cautiously if they’re bringing a contractor on board. Take these tips to the table when choosing a home renovation contractor.
Ask around. After reading online reviews, homeowners should ask their friends and family if they know of any good contractors. “Homeowners can also look for contractors who have a long lead time,” Elmore said. “This means that the contractor is booked up for a while and is likely doing good work.”
Protect yourself. There are several moves homeowners can make to protect themselves from being ripped off by contractors on a home renovation.
“First, always ask to put more payments at the end of the project, rather than upfront,” Elmore noted. “This will help ensure that you’re not out a lot of money if the contractor takes off with your money or does a terrible job.”
Secondly, don’t pay too much upfront. “A good rule of thumb is to never pay more than one-third of the total cost upfront,” Elmore added. “This will help ensure that you’re not out any money if the contractor does a bad job or walks away with your money.”
Get a bid first. Once you have a few contractors in mind, be sure to get bids from each one before making your final decision.
“This will help ensure that you are getting the best price for your home renovation project,” said The Home Buying Company owner Shaun Martin. “Always get at least three bids from different contractors before making a final decision. This will help ensure that you are getting the best price for your project.”
Be crystal clear about your remodeling plans. Make sure that you are clear about what you want before signing a contract with a contractor.
“Once the work begins, it can be very difficult and expensive to make changes mid-project,” Martin noted. “Be sure you know exactly what you want before work begins.
Buyer Beware on DIY
Homeowners who take the “do it yourself” approach on a home renovation project should think carefully about going forward.
“Depending on the project, your tools, knowledge, materials available, and skills in the trades, DIY is not always the most cost-effective or time efficient,” said Splitero CEO and real estate sales veteran Michael Gifford. “Check with a local home renovation professional before you start the project.”