Homeowners' Love of Remodeling Will Help Push Up Home Values

Does a desire for two-person showers, travertine floors and granite countertops push home prices up? Housing economist Tom Lawler, a Vienna, Va., consultant, argues that it does — and says these cravings are partly responsible for ballooning home prices throughout much of this decade. In a subscription-only report, he notes that household spending for improvements for single-family homes increased to $1,900 last year from $1,100 in 1997, and that such spending will likely continue to rise, despite the slowdown in home sales and prices reported earlier this week by the National Association of Realtors. Although the impact of these spruce ups is hard to gauge statistically — improvements often aren't noted in public records — he estimates that overall, remodeling is responsible for 1 percent to 1.5 percent of home-price appreciation each year. So, while prices overall may continue to decline due to overbuilding, speculation and risky mortgages, remodeling will continue to add real value to many homes.