Home Improvement During a Recession? It Makes "Cents"

The housing market may be sagging in this recession, but that doesn't mean homeowners are - or should be - holding their purse strings tightly when it comes to remodeling their existing homes. Savvy homeowners know that in this buyer's market, fixer-uppers can't compete with a glut of affordable, foreclosed and bank-owned properties; it makes sense to make your home as marketable as possible.
A Stimulating Idea
Here's one good reason to make some improvements to your home now: It can get you some money from the government. President Obama's February 2009 economic stimulus package includes tax credits for homeowners who invest in energy-efficient home improvements. For qualifying garage doors, for example, you can earn up to $1,500, not to mention the savings you'll see on your power bills. Tax credits reduce your taxes dollar-for-dollar.
The Economics of Home Improvement
Why spend the money on remodeling now, when times are already tough? It's a simple matter of supply and demand. Builders and contractors are hurting right now, which means they're now offering their services at lower prices these days than they might in a better market. Not to mention that supplies like wood, drywall, or concrete can be found at lower prices now than they were just a couple years ago. You could actually save 11-22 percent on home renovations in the current economy, depending on the size and scope of the project.
This means that while the average remodeling project sees a return on investment of roughly 80 cents on the dollar, your savings in supplies and labor might make for an even bigger return when the market rebounds, multiplying your selling power. Now there's some good economic news.

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Home Improvement and Remodeling - How to Save Money

Homeowners know that the list of home improvement and remodeling projects never seems to end. If it's not the bathroom that needs to be retiled, then the kitchen needs to be expanded, or a new set of windows installed into the bedroom. If you're like most homeowners, then you're also looking for ways to save money while still making these projects happen.  

Home Improvement: Do It Yourself

The most obvious way to save money up front is to do the work your self. Most remodeling projects can be done in your spare time, and with a little research under your belt, there's no reason why you shouldn't be able to install new kitchen countertops. Of course, doing some of the more odd jobs around the house may require expensive tools you don't have.

Remodeling: Rent Or Borrow Tools

Remodeling projects can cost a lot, but the supplies don't always have to. Save money by borrowing and renting as many of the tools as you can. If your buddy doesn't own the cordless circular saw you need, then look for supplies auctions online. There you can score some of the tools (and supplies!) you need for less than your local hardware store would sell for.

Home Improvement: Auction Off Projects

Then again, maybe you simply don't have the time to shop for tools, research how to do it, and pull the entire project together your self. In this case, save money by auctioning off your remodeling and home improvement projects to licensed professionals. A whole new host of sites are cropping up specifically to connect homeowners with contractors who are looking to bid on new projects.

By thinking your project through, doing research and shopping around, you can always save money on home improvement projects. But if you're just not sure you'll have time to complete the remodeling yourself, then consider auctioning construction projects off online.

Home Security Supplies

It is important to ensure that your household is safe and risk-free. Taking measures to increase the effectiveness of your home security will go a long way towards improving your psychological state as well. Even if you happen to live in a neighborhood with a low crime rate, purchasing home security supplies and installing a valid security system in your home is highly recommended. When considering the different options available, you should try to build up some knowledge about the different kinds of home security supplies, and find something that suits your current lifestyle and schedule. There are many professionals available that can assist you in this matter, from home insurance salesmen to employees at security companies. These individuals should be able to provide you with useful counsel and advice on which home security supplies would be ideal for your situation. The Internet is also an excellent resource that can be consulted. There is a wealth of security-related information available to you at the click of a mouse.

Sometimes, the best home security supplies available are simple and effective, and do not even need to be hooked up to an electrical source. Displaying a sign on your window or door warning of the installation of a security system is known to be an effective psychological technique that deters potential burglars from making a decision to intrude upon your property. Of course, there are other methods which can be employed if a burglar has already entered your house.

Wireless alarm systems are regarded as being much more effective than conventional wired home security systems, as they are simpler to maintain and harder to intercept or shut down. They usually consist of a variety of alarm units which when set off will transmit a signal to the main alarm control device, triggering a resounding alarm that will shock and frighten away criminals in most cases.

Digital video surveillance is another method you could employ to safeguard your household. These supplies available in this department include mini cameras that are difficult to find, connected to remote servers that feed out video in real-time to private web pages that can be accessed by the home owner after entering a user ID and password.

Another useful item to be purchased for your home security supplies are smoke detectors. The installation of smoke detectors will help to ensure that if a fire breaks out somewhere on your property, it can be controlled. There are some smoke detectors that are hooked up to water tanks, and will trigger water sprinklers capable of extinguishing even large domestic fires. Other fire alarm systems and smoke detectors will notify the fire department immediately through a digital network, informing them of the location of your home and easy access points.

There are many different home security supplies that can be purchased at reasonable prices at a variety of different stores that specialize in the selling and installation of security systems. Take your time first, and conduct an in-depth research on the different products available, in order to find something that suits you.

Home Improvements Made Easy!

Many people take on home improvement projects to make changes to their environment. People get tired of the old scenery and want to make their surroundings interesting. I know I do. Some invest large amounts of money in such projects while others invest little. Many homeowners make the home improvement process out to be something tough but it can be easy.

When beginning any home improvement project, it is important to have a plan as to what you will do. Careful planning allow the project to run smoothly so there will be no confusion as to what should be done. Though we know that in life things happen that are unplanned, planning the project can minimize the stress of the project should unplanned circumstances occur.

Planning out how many materials are needed for the project is important, as you would want to make sure you have enough to get the job done. Running out of materials can be very stressful as you would probably have to run back out to get more which disrupts the flow of your project. I get into a zone when I am doing a project and having to stop and run back out really messes up the zone I am in. It is better to have too much than too little though you don't want to have an abundance. Some ways you can find out how much you will need is by doing the following;

1. Measure the width and length of the room. This is especially helpful if you are going to lay tile or wood. If you are tiling walls, this is also helpful as these measurements will enable you to know how much tile you will need for that particular surface when it is time for you to go to the store and purchase.
2. Determine ahead of time which fixtures you will need. Doing this will enable you to have all that you need right there at your disposal so you won't have to make any unnecessary runs during the time you want to hurry up and get the job done.
3. If you are painting, measure the space you will be painting. If you are unsure how to do this, there are a variety of web sites that you can check out for tips on how this can be done. Just do a Google search: or, for very direct results, go to www.ask.com and type your question in the search box, and answers to your questions will come up.

Another thing that is important when planning a home improvement project is that you need to pay attention to what colors and design will match the decor of the room in which you are remodeling. You can find many helpful ideas for various colors and designs, you could check out home improvement magazines as well as web sites on the subject.

Take a trip to your local store that sells home improvement supplies. This allows you to see which color paints and carpets you can use to match the decorum of a room. If you are going to lay a wood floor in a particular room of the house, this will give you the chance to see the many different styles of wood that are being offered. In fact, my next project is to install laminate flooring on my staircase and two bedrooms.

Budgeting is another important factor. When purchasing supplies, it is a good idea to set for yourself a budget so you won't go crazy spending more money than is necessary.

Reinventing the 312 Home Improvement Loan Program

Over the last thirty years the community development field has moved away from its early focus on helping homeowners maintain and improve their properties towards the development of new affordable housing. Fueled by the resources of the Low Income Housing Tax Credit Program (LIHTC) and a confident economy, and in flight from lead remediation requirements for housing rehab, non-profits as well as for profit developers and local governments began to shift towards the promotion of new construction - both rental and homeownership - and away from housing rehab aimed at assisting individual owners.

The time has come to shift back.

Hundreds of thousands of foreclosed properties, declining property values and the loss of home equity, the absence of conventional credit, the need to make older houses energy efficient, opportunities to stimulate the local small construction trades and building supply markets - all of these factors demand that we look again at housing rehabilitation as an important policy option.

We need tools to promote the repair and rehabilitation of our older housing stock. Historically, the federal government played a leadership role in promoting home rehab and we need the Federal government to play this role again. A key role government can play is to authorize a significant amount of funding for the Section 312 Loan Program. We need to revisit this old tool and reinvent it making it relevant to the current situation.

The 312 Loan Program was authorized in the Housing Act of 1964. It provided loans from the Federal government through local municipal governments to home owners and landlords at 3% for a twenty year term. The per unit rehab cost allowed was $27,000, which in the 1970s and 1980s was a significant amount of money. It was used often in Urban Renewal Conservation Areas to assist homeowners in improving their properties and where it had a fairly major impact. It also served as a key component in the Federally Assisted Code Enforcement Program (FACE) to help owners bring their properties into code compliance. And it was the source of financing in the Urban Homesteading Program where vacant properties owned by the Federal government where auctioned off for a dollar.

The 312 Loan Program had some issues. It was cumbersome and time consuming for borrowers. It took a long time to get loans approved and people often deferred work while waiting for approval. People who were savvy enough to use architects, i.e. people of higher incomes, were often the most successful in securing funds. As local governments began to use Community Development Block Grant (CDBG) funds to support housing rehab, 312 became diminished as a tool and fewer funds were allocated to it. While the 312 Loan Program currently exists in the HUD menu of programs, it has no money allocated for it.

This needs to change.

Today we are confronted with a situation that demands a significant response. We as a nation want to overcome the effects of the foreclosure crisis and return more properties to productive use. We want to increase the energy efficiency of residential properties, and we want to stimulate the economy. These efforts are hampered by the absence of capital, but they are also hampered by an anti-government investment ethos on Capitol Hill. Why should government do what the private sector can do? Why bother funding an obscure program, the kind of "legacy program" that HUD in its strategic plan wants to shift its focus from?

Here are ten reasons:

1. It is a stimulus that everyday people in cities and inner ring suburbs can see and understand. While earlier stimulus efforts have created results that people can see, a national home improvement loan program can benefit thousands of citizens directly.

2. It promotes confidence. When someone sees their neighbor down the street put on a new roof or rebuild their porch it makes them feel more confident about the future of the neighborhood and it may lead them to seek to make repairs on their own. We need to put this dynamic in place.

3. It's simple. Unlike several of the initiatives being developed by HUD that are marching down the same sad path of prior Federal interventions in cities, it is simple and understandable. It helps people and not just developers. It's not social engineering and it doesn't have a lot of moving parts. It can effectively be described in thirty seconds.

4. It's a loan and not a grant. People paid on their 312 loans. Money invested in a national home improvement loan program will get substantially returned.

5. It has a multiplier effect. It creates jobs in the construction industry as well as in the building supply and manufacturing sectors of the economy.

6. The process can be improved. We know more than we did in the 1970s about how to bring products to consumers. With new technologies around developing the scope of work, loan origination and servicing software - and the potential for outsourcing these functions-all are potential ways this program can be more accessible and user friendly. We also know more about marketing and how to effectively promote such a program.

7. A delivery system exists to get this money out. We have a host of institutions like NeighborWorks America organizations, community development corporations, Community Development Financial Institutions, as well as delivery systems that still exist in local governments that can be organized to help citizens access these resources. We also have financial institutions that have been a delivery system for tax-exempt housing bonds that also could be part of a delivery system.

8. It can generate revenue for this delivery system. Charging loan origination and rehab service fees can generate revenue for cities and other providers.

9. It can promote widespread energy conservation. Borrowers could be required to have an energy audit and make changes based on the audit findings. Borrowers who choose to install solar heat could receive an interest rate benefit for their whole project.

10. It is more "shovel ready" than many stimulus efforts. Large public works projects require significant planning. Home improvement projects require planning and bidding out jobs but this process is usually less complex.

A national home improvement loan program based on the 312 Loan Program is not a panacea for urban ills. It is not an anti-poverty program - it is a home improvement program that can benefit low-income as well as other income homeowners - and as such can have a larger constituency.

Can't the private market do this? Sure, but it isn't. Capital is not flowing like it once did. Lenders aren't doing much in the way of home improvement lending and both supply of capital and demand for such capital is down. Equity lines that financed home improvement in the last several decades have dissipated, Demand needs to be stimulated. Providing an attractively priced loan product that is marketed well can stimulate that demand.

So how much would this cost? An initial allocation of $2.5 billion would potentially generate 50,000 loans with an average loan size of $50,000. Fees charged to borrowers for rehab services and origination could produce $100,000,000 - $125,000,000 in revenues throughout the delivery chain. $20,000 in materials purchases on a $50,000 rehab job could provide $1 billion in materials purchases for 50,000 projects, along with various sales tax revenues those purchases generate. This kind of volume would provide work for thousands of contractors, laborers, architects, building suppliers, and manufacturers of building supplies. It would also provide an interest rate return for the Federal Treasury.

For a redesigned 312 Loan Program to be effective in today's environment it would need a few changes. First, change the name. 312 means nothing to anyone outside government. The name does not encourage one to borrow money. Second, raise the interest rate to 5%, but retain the ability to finance projects at 3% if they meet certain criteria, like the installation of solar energy or the rehab of a foreclosed property. Third, raise the per unit amounts to $57,000 per unit, and $75,000 for the rehab of a vacant property. Fourth, make the loan available in cities and older suburbs with no qualifying income requirements, so that people would not have to be low-income to borrow the funds.

This is a conservative program. It is about conserving what we have - our rich and diverse housing stock - by promoting maintenance and improvement. It is easy to understand. It supports rank and file homeowners and not just developers. It engages all homeowners and is not limited to low income borrowers. While driven by the Federal government it allows for partnerships with local banks and non-profits with consumer lending capacity. It has the potential to stimulate local economies and lessen the cost burdens on municipal governments. But most of all it is a loan and not a grant program. It will return money to the Treasury.

Innovation is not only inventing new things. When we look ahead for change sometimes we ignore what worked in the past. We assume that just because something was done once, its shelf life has expired and can't be done again. Reinvention is also innovation. Repositioning old products to make sense in a new situation can be just as innovative as inventing complex new programs that look good on paper but don't deliver. Let's get real. Let's keep things simple. Let's reinvent 312.