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The Oil of Home Improvement Projects

Many people have been following the highs and lows of the stock market with the doom and gloom of possibly delayed retirement. Others follow the running CNN tally of the Dow Jones Industrial Average with a type of rubbernecking fascination, even as experts tell us that the credit markets are the bigger concern for the future of our economic health. As the impending economic recession drives down prices across the market, opportunity lies in more places than just the gas pump.

Lumber Prices, Oil Prices, and the Economy
Although lumber mills are getting crucified by steeply declining lumber prices, homeowners and carpenters are licking their chops at some real bargains. According to Random Lengths, from August 29th to October 24th, framing lumber dropped 21 percent. The Chicago Mercantile Exchange, where lumber is traded like stocks, saw framing lumber futures drop off even more precipitously from $254.8 to $178.8 per 1,000 board feet. That’s a loss of 30 percent. During the same period, light, sweet crude oil fell from $115.46 to $64.15 or a loss of 44 percent, one of the steepest declines in U.S. history.

Now, it should be noted that this type of decline from lumber prices is far from across the board. Specifically, the Southern Pine Composite (SPC) —an index for the weighted average price of 35 different lumber items including dimension, boards, decking, and timbers—has held its own against other lumber prices.

Lumber Keeps the Home Improvement Engine Running
Without oil, people can’t get to work, they can’t shop, and the economy stops functioning. So it is with lumber and the home improvement and home building markets. Without lumber, houses can’t be built, floors aren’t as extravagant, decks are made from cheap synthetics, and many people put off their fence building projects. Wood siding and wood cabinets go out the window, window frames must be made from vinyl or aluminum, outbuildings such as gazebos look artificial. There is no building material that is even in the same category as the timeless look of authentic wood. Moreover, vinyl, laminate, composites, and other synthetic materials are exactly like the electric and hydrogen-powered cars of the home improvement industry: They hold immense promise, but they haven’t delivered yet.

What Does this Mean for Homeowners?
Are you one of the many thousands of homeowners wondering what they should do with their money to keep it safe? Sure, you could take your money and buy U.S. Treasury securities, but odd as it sounds, now might just be the absolute perfect time to invest in your home and complete a home improvement. Take, for example, new hardwood flooring, a deck addition, privacy fencing, or any other home improvement that requires a good deal of lumber. The best method, regardless of lumber pricing trends, is to go to your nearest lumberyard every week to look for the best bargains. Plus, as more and more people continue to hoard their cash, flooring, deck, fencing, and other home improvement contractors have fewer and fewer projects on their docket, increasing competition among the contractors, and driving down project estimates.

Hidden Gems of the Poor Economy
Economists, TV pundits, and American families are looking for a silver lining to these tough economic times. Many of the experts are citing low gas prices as a type of indirect economic stimulus, putting money back into the pocket of U.S. consumers. People mistakenly believe that putting any extra cash toward a home renovation is a poor investment, since home values have tanked. This might be true if you have to put your home on the market in the next few months, but if you’re able to hang on to your property—whether it’s your primary residence or a rental property—the housing market will inevitably rebound. Meanwhile, the cost of home improvement will follow suit, meaning you might have a relatively short window to complete one of these bargain lumber-oriented projects.

Making your Home Renovation Pay Off

tgckylHome renovating is a tricky business. Most homeowners dream big, and it’s not unusual for a homeowner’s list of wants to push the limits of what’s realistic to take on. When deciding which renovation is best for your home, you should be asking a few questions. First, what type of renovation does your home need? Two, which renovations are going to add the most value to your home? Finding a balance between these two is where you’ll likely find the best returns financially and on a personal level. Here are some ideas to help.

Which House Renovating Projects Pay out and what’s Popular?
Start out by getting to know home renovating. Research the web, pick up some building and design magazines, check out some books from the library and watch all the home improvement TV you possibly can. You’ll quickly learn that kitchen and bathroom remodels will add the most value to your home, basement remodeling can be a great way to add a lot of square footage without a major addition, and aging-in-place (remodeling to accommodate aging adults) is the fastest growing remodeling trend in the business. Take it a step further by talking to several local contractors and you’ll also get the skinny on what’s selling and what’s hot in your neck of the woods. What’s all this knowledge going to do for you? Easy. You’ll have a better idea of what your options are, and which renovations are going to pay off most in the end.

What are the Joneses up to?
After you’ve become an expert on home renovating in general, take a drive or a walk around your neighborhood. Pay attention to what other homeowners in your area have done in terms of house renovating and make a note of improvements that appeal to you. Maybe you’ll stop at a second story addition and think how nice the extra bedrooms would be, or it might be the new paint job on the neighbor’s home that gives you pause. Take it all in, and take notes so that you’ll remember what caught your eye. And how about the inside? Pick up some real estate brochures as you walk by homes on the market, especially those with a similar floor plan to yours. You’ll be amazed at how they can give you a glimpse of what a kitchen remodel, some new flooring, or a new master bedroom suite might do for your home as well.

Which Home Renovating Projects Fit your Neighborhood?
The other reason you should start paying attention to your neighborhood is to get a good idea of what homes in your neighborhood sell for, and what they have to offer. Choosing the right renovations for your neighborhood will set your home apart from the others and raise its value. If you overdo it, however, the money you put in can be virtually impossible to get back out. Take a subdivision of modest ranch style homes, for example. Building a modest redwood deck in the backyard can really distinguish it from all the other homes and their concrete patios. Throw in a hot tub, swimming pool, and a backyard gondola, however, and not only will you not get your money back, but potential homeowners will likely shy away from a home so out of place with its surroundings.

Which Home Renovating Project will you Enjoy Most?
Finally, sit down and think about which house renovating projects float your boat. By now you’ve probably acquired a list of several home renovating ideas that you’re interested in, and that make sense from a financial standpoint. But which one is best for you? Sure, it’s important that you invest in home improvements that are financially sound, but remember, these renovations aren’t all about business. They’re also about improving your life. That being the case, which activity do you enjoy more? Cooking and entertaining, or kicking back and watching a movie in style? Answering that question can be the deciding factor between a kitchen remodel and turning your basement into a top-of-the-line rec room/home theater. Both make good sense in today’s home market, but which one makes the most sense for you? Once you make that decision, you’re ready to talk to a contractor about what it’s going to take to get your new renovation project up and running as soon as possible.