Like far too many discussions about sale prices there is far too much focus on the investment value aspect of RE as being the one true standard of merit.

And quoting numbers about the improvement industry during this past year are as useless and devoid of meaning today as any other numbers from any other industry or market traffic that have been cobbled together into a "statistic". it is a brave new world out there.

Enough already!

(deep breath)
Whatever else is going on in the world there will always be people who are acting in conflict with the larger trend with most of them doing so for same very good core reasons that people have always done those things. This doesn't make them trendsetters.

Home Improvement work in particular needs to be valued against it's functional utility for YOU and your family over the useful life of that work... based in the assumption that you will be remaining in the property for every month of that 15 to 30 years time.

If you have the genuine NEED for X and the cash to pay for it... this is about the best time in the history of the world to go out and buy X; maybe even borrow to pay for it.

But! if you don't truly need X and you don't have the cash to pay for it.. save what cash you do have and do without X.

eg: That leaky basement Jaime mentioned above? Get that fixed right (kind of spendy) and you'll gain a dry basement that can be used for other purposes and consequently you'll not *feel the desire* to remodel the bedrooms so much.

Instead of moving this year, we have decided to spruce up our house by upgrading our furniture, painting, and adding to the kitchen (countertops and floors.)

I suppose you could say we are pre staging our house to put it on the market, with the idea that at least we won't have a higher house payment to accompany the costs of buying new furniture.

The upside of us not moving is that we benefit from the Homestead Tax Credit and have good cashflow, which makes us generally feel more secure. (BTW: The Homestead Tax Credit is a strong disincentive to buying a new home in BALTO b/c one then must pay the highest tax premium in the STATE of MD.)

We bid on two homes this year and chickened out from making an offer on another home. Prices still strike us as a high in BALTO CITY and we are averse to being mortgage poor or putting a huge chunk of our money towards a flat / declining investment (real estate.)

Since my house will soon be underwater and sink to 1979 prices I decided to spend my money on renovations with the biggest bang for the buck.

Relative to inflation televisions were more expensive in 1979 than today; therefore, I am buying televisions as fast as I can because they will also return to 1979 prices just like the DJI, inflation, and gold will, too.

In all seriousness, I am doing a ton of work on the house. I recently added indoor plumbing and ran electricity to the top level.

I hear indoor plumbing is all the rage.

If you are thinking about fixing up your home and spending thousands of dollars, you might want to wait and see what happens with this new "Cap and Tax" Bill that is going around. While many think that it is great to be clean and green, what you might not know is that you will have to meet certain energy efficiency regulations set by the EPA in order to sell your home. That's right. If your home does not meet the standard, you can't sell your home!!!!!

http://conservativepapers.com/index.php/2009/10/22/global-warming-bill-increased-taxes-h-r-2545/

In effect, this bill prevents you from selling your home without the permission of the EPA administrator.

To get this permission, you will have to have the energy efficiency of your home measured. Then the government will tell you what your new energy efficiency requirement is and you will be forced to make modifications to your home under the retrofit provisions of this Act to comply with the new energy and water efficiency requirements. Then you will have to get your home measured again and get a license (called a “label” in the Act) that must be posted on your property to show what your efficiency rating is; sort of like the Energy Star efficiency rating label on your refrigerator or air conditioner. If you don’t get a high enough rating, you can’t sell. And, the EPA administrator is authorized to raise the standards every year, even above the automatic energy efficiency increases built into the Act.

The EPA administrator, appointed by the President, will run the Cap & Trade program (AKA the “American Clean Energy and Security Act of 2009″) and is authorized to make any future changes to the regulations and standards he alone determines to be in the government’s best interest. Requirements are set low initially so the bill will pass Congress; then the Administrator can set much tougher new standards every year. The Act itself contains annual required increases in energy efficiency for private and commercial residences and buildings. However, the EPA administrator can set higher standards at any time.

Sect. 202 Building Retrofit Program mandates a national retrofit program to increase the energy efficiency of all existing homes across America .

Beginning 1 year after enactment of the Act, you won’t be able to sell your home unless you retrofit it to comply with the energy and water efficiency standards of this Act. You had better sell soon, because the standards will be raised each year and will be really hard (i.e., ex$pen$ive) to meet in a few years. Oh, goody! The Act allows the government to give you a grant of several thousand dollars to comply with the retrofit program requirements if you meet certain energy efficiency levels. But, wait, the State can set additional requirements on who qualifies to receive the grants. You should expect requirements such as “can’t have an income of more than $50K per year”, “home selling price can’t be more than $125K”, or anything else to target the upper middle class (and that’s YOU) and prevent them from qualifying for the grants. Most of us won’t get a dime and will have to pay the entire cost of the retrofit out of our own pockets. More transfer of wealth, more “change you can believe in.”

Sect. 204 Building Energy Performance Labeling Program establishes a labeling program that for each individual residence will identify the achieved energy efficiency performance for “at least 90 percent of the residential market within 5 years after the date of the enactment of this Act.” This means that within 5 years 90% of all residential homes in the U.S. must be measured and labeled. The EPA administrator will get $50M each year to enforce the labeling program. The Secretary of the Department of Energy will get an additional $20M each year to help enforce the labeling program. Some of this money will, of course, be spent on coming up with tougher standards each year. Oh, the label will be like a license for your car. You will be required to post the label in a conspicuous location in your home and will not be allowed to sell your home without having this label. And, just like your car license, you will probably be required to get a new label every so often – maybe every year. But, the government estimates the cost of measuring the energy efficiency of your home should only cost about $200 each time. Remember what they said about the auto smog inspections when they first started:20 that in California it would only cost $15. That was when the program started. Now the cost is about $50 for the inspection and certificate; a 333% increase. Expect the same from the home labeling program.

Sect. 304 Greater Energy Efficiency in Building Codes establishes new energy efficiency guidelines for the National Building Code and mandates at 304(d) that 1 year after enactment of this Act, all state and local jurisdictions must adopt the National Building Code energy efficiency provisions or must obtain a certification from the federal government that their state and/or local codes have been brought into full compliance with the National Building Code energy efficiency standards.

There's no doubt that homeowners are having to cut back in many ways, including the extent of their remodeling plans. It's certainly no different in California where I live. Nevertheless, if you are itching to launch into home improvement, there is much that can modernize and enhance the look & feel of a home without having to do major remodeling or add square footage. Start with curb appeal, floors and paint, then move to kitchens and baths. An impressive front door helps alot. New faucets, fixtures, and appliances can do wonders, too. Above all, homeowners must focus on cost-effective, high-value-added projects, and you shouldn't have to mortgage the house or break the bank. I offer more info on my blog & web site.

I did a number of things over the past couple of years -- fairly urgent like basement leaks and sewer pipe replacement. Cosmetically, at least my house was renovated by the previous owner. But with the age of most B'more homes, there's always something. I'd been planning to install new windows in 2010, and a few other energy efficient improvements, but may wait to see where the market is going. Although a sale now could cover my mortgage, recouping expenditures on improvements already done would not be possible in the current market, much less further projects.

Mr. Rational's points are well-taken, but we all need to keep in mind that real estate is BOTH a CONSUMPTION asset (like a car) and an INVESTMENT asset (like an equity/bond). It is not passive, it is very active and HUNGRY. It needs regular maintenance. Despite what residential brokers thought in 2006, it is NOT liquid. It has high transaction costs.

However, real estate is one of the few (if not the only) asset class where the investor can change the fundamental investment characteristics, such as adding another bedroom to a house to generate additional cash flow.

It cannot be regarded as one or the other (INVESTMENT or CONSUMPTION). Just ask the people who bought at Silo Point. Those units are great from a consumption standpoint, but have to date been a terrible investment. Typically it is an average American's most valuable asset, so one cannot ignore the investment characteristics. To do so would be employing the ostrich approach by burying one's head in the sand.

Frank Rizzo: you can read the cap and trade bill online here:

http://www.govtrack.us/congress/billtext.xpd?bill=h111-2454

The article you link claims that this ban on selling houses is in Sec. 202. Check it out for yourself; it's about retrofit programs, and I don't see anything in it about its being impossible to sell your house without participating in one.

More generally: do you honestly believe that a politician who depends on popular support to keep his job, not to mention his Congressional majority, would ever, EVER do anything like this?