Remodeling Fever : Trapped in a Sky-High Market, Homeowners Try Another Way to Create That Dream Castle
James and Ria Berkus were about ready to move into the Santa Monica house they bought last January. But a little remodeling got in the way.
They first wanted just to paint, carpet and move in, Ria Berkus said. Then they decided on a “light remodel” of the kitchen and master bedroom, which led to complete redos of four bathrooms, the kitchen and master suite. Now, four months over schedule, the project is still growing and there’s no end in sight.
“You do one thing and the thing next to it looks like a slum,” explained James Berkus, president of Leading Artists Talent Agency. “Originally, we were spending in the low six-figures. Now it’s around double that.”
A ‘Big Ticket’ Boom
The Berkuses are not the only homeowners busy reworking their house. Los Angeles is in the grips of a remodeling boom, with “big ticket” jobs the order of the day.
“It’s been so phenomenal, it’s unreal,” said William Long, a Whittier contractor who has specialized in home remodeling for 35 years. “It’s going crazy--and no one wants to add on just a little bit anymore.”
While Los Angeles Building and Safety Department figures show only a slight increase in remodeling activity, officials believe the numbers don’t reflect considerable work being done without permits. Such “bootleg” remodeling is so widespread, they add, that the department has been restructured to help uncover more of it.
“The cost of professional construction people has gone up so much, a lot of homeowners say, ‘Hey, I’ll do it myself on weekends,’ ” said Bob Matsumura, principal inspector at Building and Safety’s West Los Angeles office. “Sometimes they don’t know they’re supposed to get permits.”
(In Los Angeles, a $20,000 project that adds 400 square feet to a home will require fees of about $830; alteration permits are not as costly because they are not subject to a school construction fee of $1.53 per square foot of added space.)
House Prices at a High
Contractors, building suppliers and homeowners throughout Los Angeles offer many reasons for the remodeling boom, but one stands above all others: Housing prices are at an all-time high, making “trading up,” the traditional route to a dream house, difficult in today’s superheated market.
The median-priced house in Santa Monica hit $431,413 earlier this year, according to the Los Angeles Board of Realtors. In a separate reporting area incorporating Eagle Rock, Los Feliz, Bel-Air, Westwood, West Los Angeles and Pacific Palisades, the figure is $389,000.
Faced with spiraling prices that put many homes out of reach, homeowners like Kathy and Harlan Posen of Sherman Oaks are staying put and remodeling to suit changes in life styles and tastes. The Posens’ 26-year-old home is getting a new family room, bedroom and a remodeled kitchen.
After looking at other homes, the couple reasoned that “for what it would cost to move, we could change this house,” Kathy Posen said.
The couple had two other financial incentives to remodel rather than buy another home: The rising value of their property has created a treasure-trove of equity to finance a remodeling loan; and under property tax reform known as Proposition 13, a remodeler’s assessment is increased only by the dollar value of the improvement, while a new-home buyer pays taxes on the purchase price.
Other remodeling is done out of necessity. Some young couples who can’t afford to buy property are helping to pay for additions to their parents’ homes, contractor Long observed. That means money that would have gone to rent instead becomes equity in an improved, enlarged house that the young couple may someday inherit, he said.
But considerations of taste and convenience appear to motivate most, experts say.
Bob Sunness and Patty Friedman, for example, really didn’t have to remodel their 60-year-old Brentwood home.
“Everything functions,” said Sunness, a mortgage broker. “But you update your appliances and you have a more attractive living environment. And you feel that on the day you sell your house, you’ll recapture your expenses, plus maybe some more.”
When Julie and George Rusznak set out to buy on the Westside, they were looking for a new or near-new home. But even with Julie Rusznak’s contacts as manager of a real estate office, the couple couldn’t locate the affordable home of their dreams.
“Everything is so insanely high-priced right now, the only thing to do was buy an old one and fix it up,” she said. The couple now expects to spend $350,000 remodeling their 60-year-old home in Pacific Palisades.
Skyrocketing labor and material costs don’t seem to discourage those bitten by the remodeling bug, contractors report. “The total doesn’t scare them as long as they can afford the monthly payment on a loan,” said Long of Whittier.
“It’s smart, too,” he continued, “because when you build a bathroom, it’s like building a mini-house. You need permits, there’s concrete work, stucco, roofing, electrical, plumbing. All those people have to come out, so the bigger the job, the more the unit-cost savings, and the more you’ll increase the value of your house.”
On the Westside, the average addition to a single-family home costs about $39,000 during the first quarter of 1988, up from $26,000 four years ago, according to the Los Angeles Building and Safety Department. Appliances and other necessities are not included in such figures, so actual costs are much higher.
Most common--and most likely to enhance a home’s value--are bathroom and kitchen remodels. Also popular are second-story additions in older areas where land has been subdivided into small lots.
“They’re old bungalow-type homes,” said Sam Weeks, a Torrance-based contractor. “I’m doing second stories in Long Beach,” he explained, “taking 800-to-1,200-square-foot buildings to 1,800 square feet or more. Redondo, Hermosa, Manhattan and Palos Verdes are also extremely busy in remodeling.”
“I can tell you what not to do,” said Bob Cummings of Bragg & Smith Realtors in Mt. Washington. “Hot tubs or swimming pools. I’m finding they’re a deterrent to sales.”
Yet for those determined to upgrade, the possibilities seem endless.
“You can spend $40,000 on a bathroom if you want,” said Joanne Simmons Dee of Familian Bath/Kitchen Center in Santa Monica. Available are: $2,500 designer toilets; showers equipped with spinning, wall-mounted body brushes; and even a microprocessor system that allows the affluent to start the bathwater running via telephone.
For the kitchen, there is a brick-lined pastry oven, a faucet that displays water temperature, a refrigerator that controls humidity (eliminating the need to cover food) and a modular stove that features halogen burners, a deep-fat fryer and barbecue.
Remodeling fever has had predictable effects on contractors.
“Four or five years ago, there were guys on their rear ends,” said Armand Fontaine, a spokesman for 400-member, Los Angeles-based American Building Contractors Assn. “Now they’re busy as hell.”
Some, like Anita Boillin, are even turning work away, avoiding customers “who are never going to be happy,” as well as homes in severe disrepair.
“I decided when this got real busy, it gave me an opportunity to select my customers and keep my work in a more limited geographic area,” said Boillin of Cypress, a remodeling specialist with 13 years of experience.
Like others in the industry, she said most of her clients are well-informed about remodeling.
“When I started in ‘75, people had no idea what they wanted. Now they do. They’ve looked at homes, new and used. They’ve read all the magazines.”
For those who opt to do their own remodeling, several stores offer weekend classes in plumbing, tile work, carpentry and other basic skills. To keep up with increased demand for products, the Atlanta, Ga.-based Home Depot chain has opened eight new Southern California stores since February, a spokesman said.
Though remodeling can involve considerable expense and can turn into an anxiety-ridden, much-delayed project, homeowners still hope for the best.
As Posen of Sherman Oaks said of the planned renovation of her home: “There’s going to be very little we don’t like about this house when we’re done.”
