Why is a Bad Economy a Good Time to Remodel Your Home? Why is a bad economy a good time to remodel your home? Because you can remodel your home a rock-bottom prices! Even more than low prices, you can often get better quality materials and workmanship at lower cost than average materials and work. This might not seem to make sense at first, but if you can learn to think in terms of supply and demand, you can quickly understand how to get a huge bang for the buck by remodeling now.
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The Remodeling Sentiment Report for the fourth quarter of 2008 conducted by www.remodelormove.com indicates the effect of the current bad economy. It shows a huge drop in the number of people who were planning home remodeling projects. A similar study by the association of professional home remodelers showed a similar outlook. Their survey of remodeling contractors showed that:
- The average number of jobs during the fourth quarter of 2008 was only 17.6, down sharply from the
 same period in 2007 of 41.8 jobs;
- While these contractors received, on average, 39.9 calls for bids on new jobs in 2007, the average in 2008 was only 18.9 calls; and
- When asked how many jobs they were committed to for the next three months, these contractors indicated a drop from 35.1 jobs in 2007 to only 16.2 jobs in 2008.
As dismal as this looks at the end of 2008, these surveys point to an even more dismal first quarter (perhaps even first half) of 2009. These figures certainly indicate a dismal economy and a terrible remodeling market. But this is actually very good news for homeowners who want to remodel.
Why is a bad economy a good time to remodel your home? Because almost every cost associated with the remodel will be lower in a bad economy. If you are concerned about the possibility of losing your job – or your home – it might not be the best time for you to remodel your home. But if you feel reasonably secure in your job and you either have cash or know you can get affordable credit, it’s time to act.
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A bad economy means demand for many construction materials, major appliances, and hardware is low and these items are being priced low to encourage sales. These materials and products have already been produced. They are sitting in warehouses costing the manufacturers and retailers money for storage and for carrying inventory. When the housing market tanked, there was far less demand for these products. Many of the costs have declined over recent months and years. Materials, appliances, hardware, etc. are at least half of the cost of many average remodeling projects. The result is that a bad economy means you can get these items at great prices.
A bad economy, unfortunately, also generally means an increase in the unemployment rate. As manufacturers scale back production, they don’t need as many people, resulting in layoffs. This feeds the economic uncertainty and makes people worry about how secure their own jobs are and makes them reluctant to spend any money. Eventually this snowball keeps rolling downhill and it means people are afraid to start remodeling projects, leading to less work for contractors, sub-contractors and skilled labor. Contractors who have their own crews, need to keep them busy or they risk losing them to other jobs. Under these circumstances, people are often willing to work for a lower rate of pay so they can keep working. The result is that in a bad economy you can often expect to pay a lower rate of pay for the skilled labor you need for your remodel. The bonus is that you often get high-quality work for a lower price.
In a bad economy, contractors and sub-contractors also need to keep working. If they are to keep working and stay competitive when bidding on the jobs that are out there, they need to reduce their prices. Again, quality is not sacrificed and you can get the best contractors at lower prices.
Finally, a bad economy also means that there are fewer remodeling jobs out there. This means contractors are not moving between several jobs at once. The result for homeowners who want to remodel is that projects are finished on a shorter schedule.
If you see dumpsters and trucks at a neighbor’s home, you can be fairly confident that your neighbor understands the laws of supply and demand in a bad economy and they are taking advantage of a golden opportunity. Shorter project schedules, higher quality workmanship for less cost, keeping people working (even if at lower rates of pay) and buying the quality materials you need at bargain basement prices should be all the reasons you need to start thinking about whether you should start that remodeling project now.
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