A recent report by the Joint Center for Housing Studies at Harvard University predicted that remodeling would rebound strongly this year with an estimated growth of 9.1 percent for the first quarter and 12.1 percent for the second quarter. The study found the remodeling market held up far better than housing construction during the recession, with annual spending still close to $300 billion.
Kermit Baker, director of the remodeling futures program at the Joint Center for Housing Studies, said that remodeling nationwide was likely to remain strong as homeowners who put off maintenance and improvement projects began to spend more freely again. The study also found that the industry was beginning to benefit from the rehabilitation of foreclosed properties.
A group of leading insurers said renovations are a constant source of large claims on homeowners’ policies. And among claims, fire is the most common cause. Claims from Insurance Companies for fires started by electricians, plumbers and contractors in homes were for over $4 million across the nation.
While these claims were paid, the homeowners’ losses went beyond the financial. Not only were they out of their house, but they also lost personal items. So with the spring renovation season beginning – what should prospective renovators keep in mind?
WHY THE REBOUND? It may seem counterintuitive that even as the housing market continues to suffer and the economic recovery feels tentative, the renovation market is picking up. But Mr. Baker pointed out that while home sales and construction were linked to mortgage rates, renovations were determined more by income levels and job security.
He said during the peak years of 2006 and 2007, only 30 to 35 percent of renovations were financed through home equity loans or second mortgages. Last year, that number dropped to 15 to 20 percent.
There is more growth in smaller projects — energy-efficient windows and heating and air-conditioning systems — than in full-scale additions and expected continued growth across all types of renovations.
PRECAUTIONS AND RISKS Whether the homeowner wants to add a new kitchen or repair years of neglect, the cause of renovation problems is the same. Homeowners are concentrating on the outcome, not on managing the process.
So what should you consider before starting? Personal construction projects without the help of contractors can last a lot longer than expected. Any homeowner planning a sizable renovation should hire a contractor, for efficiency and safety, insurers say. A contractor could help move the project along and he should bring his own liability coverage and enough insurance to rebuild your house in case of fire.
Hiring a contractor is also helpful because you need someone who is fully versed in bringing on subs, who can read plans, who understands the licensing process.
The other conversation to have with a contractor is about how he will dispose of flammable liquids and manage the use of tools like blow torches.
Insurers also feel more comfortable when the owner is living in the home during the renovation. Renovations where people have to stay elsewhere and not in the home can be exposed to not just fire and damage but vandalism and theft.
THE RAG THREAT The best policy is vigilance. The top thing to monitor is oily rags, which strike fear into the hearts of risk assessors. These rags catch fire easily if they are not disposed of properly. The accumulation of the fumes from stain, varnish, and even paint could set them off – a spark or a pilot light. The solution is to make sure the rags are put away or stored in a locked, fireproof box at the end of each day.
Second on the risk list is the debris from the welding and soldering equipment used on roofs or for installing plumbing and electrical wiring. A common disaster happens when a pipe is welded but no one checks to see if any solder has fallen onto the debris below. It can smolder for hours and catch fire later that night.
Thinking about the disasters that can befall your home for the sake of a nicer, updated bathroom may put a damper on some people’s enthusiasm. It can be scary, but if you take certain precautionary measures, it can be fun and successful and make your home the dream home you’ve worked so hard at building/renovating.
Source: NY Times
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