One school of thought says that remodeling increases home values and therefore remodeling can be seen as a lead indicator for home equity. The other school of thought suggests that since remodeling tends to be financed through home equity, rising home equity drives increased remodeling activitiy.
We recently compared the BuildZoom Residential Remodeling index with the Case-Shiller Home Price index however the results were inconclusive: http://blog.buildzoom.com/the-relationship-between-real-estate-prices-and-remodeling-activity
What do you think?
We have found that our add-ons such as Alarm Systems, Custom Audio/Video, Custom Theatre, Home Automation and Integration make the home more appealing to prospective buyers. Homes with such upgrades and components are believed to be more marketable in todays world of modern technologies. The low cost for many “User Friendly” Smart home components make the home more affordable to remodel using them. We believe this ads value to the overall home equity.
Consumer confidence increases, consumers spend more money. Mor espending, improved economy, and so on.
Mortgage rates are low, home buying and home equity are accessible. Access increases sales, increased sales drives value, increased value increases equity, equity is accessible, homeowners remodel.
As a general case, the data I am familar with shows that most remodels cost more than they add in equity. I think exterior work visible from the street tends to the best, folowed by ktichen, master bath and down the list.
As sales prices increase, the benefit of adding space increases. We don’t find our room addition construction costs to be as volatile as housing costs. Currently, in a good zip code, I can add on for about 65% of completed value. If we transfer some of that 35% residual equity into remodeling, we can greatly enhance both th elivability and the salabilty of the home.
Updating a cramped home on a nice lot to have a contemporary open plan kitchen and great master suite can yield a net equity gain (so a lower mortgage payment relative to buying a property already developed) and sclability over time. Look at the traditional farm house - build a small shack in a great location, add on as the family grows.
Always keeping your home in good shape, up to date and looking fresh, it adds to its value. All work done to your home will increase the equity of your home. Leavig your home dry and in bad shape, that leads to lose in value and no equity.
