Outlook on remodeling

Back when galloping appreciation created paper millionaires virtually overnight -- or so it seemed -- homeowners eagerly tapped that easy money to finance new designer kitchens, update bathrooms and add master-bedroom suites.

That frenzied pace of home improvement and repairs slowed during the final quarter of last year, growing by just 1.5% from the same period in 2005, according to Harvard University’s Joint Center for Housing Studies. Rising interest rates made home-equity payments more expensive, and an increase in the time it takes to sell a house made many consumers skittish.

Those who did proceed with major projects in 2006 spent about $168.7 billion, says Nicolas P. Retsinas, director of the center.

Retsinas predicts remodeling will pick up when home sales do. But homeowners will make plans without a “blank-check” mentality, according to a separate remodeling survey of 5,000 homeowners, conducted in 2006 by Dan Fritschen, author of “Remodel or Move?” Fritschen, who lives in Northern California, found a majority of the respondents were increasingly cost-conscious and willing to do some of the work themselves.

In 2007, homeowners may get more for less, he said, as the slowdown in new home building frees workers for remodeling jobs and construction costs decline.