The New Family Tree: Grow Roots and Let Your House Blossom

The war on terrorism, the financial crisis, and the state of health care in this country cannot suddenly erase the narrative of American life that endures to this day. One common character of this narrative is the American who wishes to raise a family and rise through the ranks of his or her profession. The hard-work-will-pay-off-in-the-end attitude is a quintessential American ideal that is written into the genetic code of our nation.

As the family grows, so does the need for more space, more bedrooms, and a bigger home. The plan, made five or 10 years ago in many households, was to start with a small home and upgrade later to a property more accommodating for a four or five-member household. The crash of the housing bubble and ensuing housing crisis made selling a home an imprudent financial decision at best and downright impossible in many cases. The only avenue left to this crop of homeowners—whose situation fails to make the press since they're not losing their home—is to work with what they have and renovate their basements, attics, or build a home addition.

The Experts: What Arborists Say about the Future of Homeownership
Moreover, this trend of remodeling instead of moving into a new home isn't going away. The Joint Center for Housing Studies of Harvard University projects "a nearly 45 percent real increase in homeowner spending between 2005 and 2015. As a result, spending on maintenance and spending is likely to make up a larger share of overall residential investment. In fact, with growth moderating on the construction side, the remodeling share of total spending in the residential sector will reach a new high of 47 percent."

This doesn't mean the housing market isn't going to rebound. Indeed, the same study suggests that "the continued strength of immigration, as well as the movement of echo boomers (children of the baby boomers) into ages when they are most likely to participate in the housing market, ensures growth in the number of households over the next decade." This almost surely predicts an increase in housing demand a corresponding surge in property value. Still, it doesn't offset the abundant opportunities of finding and remodeling a pre-existing property.

Your Tree's Weather Report: Good Advice, Wrong Advisor
In terms of outright financial gain, buying and selling homes throughout your life is like playing the stock market. Do so at the right time and you stand to make a bunch of money, but you can also lose a bunch of money as many people have discovered over the last year or two. Owning the same home over the course of your lifetime is almost unequivocally guaranteed to protect your home equity and long-term financial benefit. The key to this stability is finding or building a home that is flexible to your current and future needs. The young homeowner should be looking for a home that can be easily and affordably expanded in the future and eventually converted into a place suitable for the limited mobility of older age.

The advice pouring out from financial advisors all across the country is not to sell off your stock right now because over the next 5, 10, 20 years the stock market is sure to rebound. The same thing can be said for any homeowner who isn't in danger of having their home reach foreclosure. Moreover, housing market research suggests that the return value of home remodels is at or near all-time lows. Remodeling Magazine, for example, reports that the overall average of cost vs. value for home remodels has dipped from 82.5 percent in 2003 to 70.0 percent in 2007. This poor rate of return for your home remodels is based largely on the current value of real estate and may be a poor indicator of this return rate down the road. Thus, for long-term homeowners, the advice coming from your financial advisor is likely to be better than the advice coming from your real estate agent.

Pruning: Even an Old Tree can Show New Growth
Although you may not have originally planned to stay in your current home this long, you may still have more options than you believe. Even if you hadn't considered the plausibility of home additions or major remodels when you bought your home, the technology, innovation, and work force of the home remodeling industry has exploded in recent years. To this The Joint Center for Housing Studies of Harvard University shows some of the most optimistic forecasts of the entire residential housing sector: "The aging of the nation's housing stick ensures steady growth in replacements and system upgrades in the years ahead."

The projected demand of home remodeling, improvements, repairs, and maintenance is driving a great push to expand the technology of retrofitting older homes with everything from stronger roofs to withstand natural disasters to low-cost modular home additions. Instead of energy-efficient A/C units and furnaces entirely new heating and cooling systems are being developed that show that solar panels are just the tip of the iceberg. Rather than being frustrated at your inability to remain financially solvent while moving into a larger home, you should look at the number of ways you can transform your current home into the custom dream home you've always wanted.

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