Fewer Remodelers Seeing Price Declines

While the big news for a long time has been the slide in home prices, there has been a similar slide in remodel project prices and project sizes as well. “Professional Remodeler” Magazine does continual research and data gathering on remodel projects and pricing. There has been a shift in the last few years to smaller projects and spending less on remodeling.

For the first time since 2007, less than half of remodelers said that their average job price has declined from a year ago; 45% to be exact. This compares to 75% last year stating that their average project price was down from the year before. Projects are still much smaller than in years past due to:

- fears of further declines in home values.
- inability to borrow against the home for projects, as equity isn’t there.

Though only 22% of remodelers say that their average project prices are up this year, that’s far better than the 8% in the same period last year. Price ranges and their market share are approximately:

- Under $25,000 projects at 40% of the market.
- Reporting project averages under $50,000 are 55% of remodelers.
- 32% state that their average is more than $100,000.
- 16% are quoting an average project over $200,000.

Kitchens are still the top project, but whole house remodels and additions have fallen significantly. Other than kitchens, most projects now are handyman work and exterior remodeling. The expiration of the energy retrofit tax credits is also proving to be a negative influence on remodel project revenues.

68% of remodelers surveyed state that consumer confidence is a challenge, and 52% said that it was the top cause of the decrease in project size. Declining home values was cited as the primary reason by 36% of respondents. 33% blamed the inability to get financing.

For real estate investors, there’s still plenty of rehab talent out there looking for something to do. Rehab and flip investing can still be done at bargain pricing, but finding a buyer is more difficult. For long term rental property investors, this may be a good time to do some renovation to make tenants happier and allow higher rents at a time when the market is supportive.