The increased amount of time spent at home over the last few years coupled with the volatile real estate and financial climate continues to lead local homeowners to look inward at their homes to increase their quality of life. As you begin planning your remodel, there are many options to consider- including financing options. We have expert insight into the current financial and real estate market to help you succeed in your project plans this year.
Remodeling Industry Growth
In the April Qualified Remodeler’s report, editor Patrick O’Toole notes, “Harvard’s Remodeling Futures Steering Committee recently released its biennial report, Improving America’s Housing 2023.“
In analyzing the report released on March 23 of this year, he says the volume of remodeling activity, “…was astonishing to me. In real terms, the market had grown at a 7 percent annualized rate from 2019 through last year.”
Relative to current project costs, something we are asked about often, he goes on to say, “Here’s something that most economists agree on: It is rare for prices of things to go down. Deflation happens, but rarely. These higher prices for labor and materials are here to stay.”
He summarizes by noting that “changing demographics, house price and equity increases, labor costs, supply chain costs, etc.—are impacting your local and regional market area. Though we hear demand is softening, it’s remarkable that it has not fallen off the proverbial cliff under such price pressure.”
And fall off a cliff it has not. Homeowners continue to want to invest in their homes, realizing that if they were to sell, that there are scant options available to buy in key areas. And if they did find something new, in most cases the work required to make that home into what they want and need will still be significant. So remodeling it is, no matter how you slice it.
The Value in Remodeling
We recently spoke with our friend Tom Cramer, Sr. Mortgage Consultant at Wintrust Mortgage, about the past year and where the future lies for those planning to finance a remodel in the coming months. His firm has already seen an increase in construction loans in the system compared to the start of last year.
“Anyone who refinanced with the historically-low rates we saw a couple of years ago will likely want to keep them,” says Tom. “Selling their existing home would likely mean taking on a higher interest rate, and subsequently higher monthly payments.”
This is one of the reasons we see the remodeling industry continue to flourish in our current market. Remodeling or adding onto an existing home is a smart way to achieve the square footage, function, and aesthetic you’re looking for without having to start over with a new home and new rate.
“We are sitting at the higher end of a 17-year average for rates currently, but if you look at a 30-year average the rates aren’t scary,” Tom says. “Inflation will be in check soon enough, and we’ll see rates even out. Right now we’re sitting around 7%.”
Many of our clients have worked with Tom in tandem with our team for project financing, and if you are looking for guidance as you plan to finance your specific remodel, let us know! We believe that taking time to plan your remodel well ahead of time with a trusted team, including any necessary project financing, will help produce a streamlined execution.
Real Estate – Revitalization & Remodeling
We also spoke recently with Susan Jensen of Cove Realty in South Barrington to get insight into the current local real estate market, especially compared to the past couple of years.
“During the height of COVID, sales were moving extremely quickly,” Susan says. “We saw a huge demand that supply didn’t match, coupled with low-interest rates. Homes were selling within a day of being listed, for thousands over asking. It was crazy.”
The market has cooled off since then, and while interest rates have risen since the historic rate drop in 2020, Susan isn’t overly concerned with where the rates sit. “The current rate we’re looking at certainly isn’t the highest I’ve seen in my experience. The value of homes continues to rise,” Susan says. “Homes are still coming on the market and selling.”
We’re experiencing a slower market, meaning homes are sitting on the market longer than they were in recent years, but Susan is still seeing a 97% sale-to-list price ratio. Inventory has been on the lighter side lately, so those looking to buy may need to compromise on their wants vs needs list – especially if the location of the home is right. Location really is key.
“The Village of Barrington has always been a popular location for buyers. Cities with charming downtown appeal – Arlington Heights, Geneva, Barrington, St. Charles, or Naperville for example – have great potential for buyers. After purchasing a home, they can either remodel/add on right away or save up and add that square footage when funds are available.”
Employment is relatively steady right now, but as inflation increases, people become reluctant to sell. Those who refinanced or purchased with the historically low rates we saw over the past two years would have to pay more if they started fresh with a new home. If rumors of layoffs continue, people may become less inclined to buy and instead turn to remodeling.
There is a sweet spot you want to achieve if you are renovating and are concerned about resale value. With expert help, we can determine exactly where the most benefit lies in working through a design-build solution with a knowledgeable team. If you’re looking to purchase a home and choose your location well, you will set yourself up for recouping a great portion of your remodeling investment down the line when it comes time to sell.
We’re seeing lead times for materials come into view faster, and project start dates opening sooner, which means now is an excellent time to start planning your remodel. Capitalize on the growing value of your home by investing in your home life as well as the future of your real estate! Our Common Sense Remodeling process will help you through each step of the remodeling process with a single-source responsibility for the best possible outcome. Call 847-836-2600 or email us at firstname.lastname@example.org to chat with our designers and move forward with your plans.
ADS Pet Corner: Sulu
This week, Sulu the cat is showing off this beautiful home bar in Huntley. Sulu is 14 years old and loves laying on the treadmill in the new home gym the Advance Design Team just finished. This chair by the bar is a cozy spot as well!
Basement Remodel in Huntley