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Home Improvement Guide 2007
First things first
Before launching into any home improvement project you should carefully consider your motivations and goals.
First things first
3 top reasons to remodel now


Many factors contribute to your ability to get the best deal on your home improvement project. While timing is one of those factors that you can't control, there are three lucrative reasons why you might want to hire a contractor now rather than putting off that remodeling job until next year.

3 top reasons to remodel now:
1.Lumber prices are low
2.Home equity levels are high
3.Contractors are idle

1. Lumber is cheap
According to the Western Wood Products Association, an organization that represents lumber manufacturers, demand for lumber is expected to drop by 7.2 percent in 2007. Repair and remodeling use of lumber is expected to drop nearly 6 percent this year.

The main reason for the drop is the slow housing market, says Shawn Church, editor of Random Lengths, a newsletter that monitors the lumber industry. Construction is down, so lumber mills have too much supply, so they've cut prices to move more product.

"We've seen prices fall throughout the second half of 2006 and on into 2007," says Church.  

In March, the Random Lengths Framing Lumber Composite was at $283, down from $373 a year go. "It was a good $90 higher a year ago," says Church.

While such news is devastating to the lumber industry, "From a consumer standpoint, lower lumber prices are a good thing," Church says. A renovation project is made up of two types of costs: parts and labor. If the wood products needed to complete a project are less expensive than those same products were a year ago, the homeowner who does their project this year may end up paying less than his neighbor who had the same type of work done last summer.

If contractors have to spend less money on supplies, they may be more willing to negotiate downward on the price of an improvement job. "Professional contractors know what they're paying for materials," says Amal Bendimerad, a research analyst for the Joint Center for Housing Studies at Harvard University. "If they see that they've got a little bit more leeway there, they may be a little more willing to eat some of that profit."

While the window of opportunity is there, it might be closing. Though real estate forecasts don't predict a huge upswing in the market in the near future, lumber prices might not stay low for long. "Mills have responded by reducing production of lumber -- by bringing production more in line with the lower level of demand," says Church. Once the mills adjust to the slower market, there will not be such a surplus of lumber, meaning prices might once again rise more steadily.

2. Home equity levels remain high
A slump in the real estate market typically affects the home improvement market. With home equity growth remaining flat, fewer people may be willing to pull money out of their homes to finance remodeling jobs. According to the National Association of Home Builders' Remodeling Forecast Report, growth of remodeling expenditures is expected to be moderate this year, after a strong 2006.

-- Posted: April 4, 2007
 
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Home Equity
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