Bad News For Some Is Good News For Homeowners

Good news for homeowners who are considering fixing up their homes.

Home remodeling has slowed as pessimism about home values sets in. Activity remained sluggish in the second quarter, according to the National Association of Home Builders, and expectations for future activity were nearly flat. Spending on home improvements and maintenance is expected to dip this year by more than 4 percent to $216.3 billion from 2007, the NAHB estimates. The group doesn't expect spending to reach 2007 levels again until (at least) 2010.

The pain is most acute in markets where home values are sliding. Falling home values are eroding equity, shrinking a resource that Americans often tap for home improvements. Homeowners are less inclined to invest cash in a depreciating asset.

When homeowners do remodel, they are shopping around more, taking longer to make a decision and scaling back their projects.

The housing slump is also introducing new competition into the remodeling arena as smaller homebuilders snap up larger remodeling projects like additions, recreation rooms and porches, said Alan Hanbury Jr., treasurer of House of Hanbury Builders Inc. in Newington, Conn. Remodelers are tightening their wallets and courting business they wouldn't otherwise to survive the slowdown. This is good news for home owners who want to make renovations because they have more bargaining power and have more qualified remodelers to choose from.

The industry's recovery is expected to be slow and depends on a stable economy, looser lending standards by banks and easing up of product prices. A recovery in the housing market is also key to bolstering the remodeling industry. Source Associated Press.