If you’re one of the nearly 150,000 homeowners in the Portland area, chances are, you’ve at least thought about remodeling in the last few years. However, in an uncertain economy and unprecedented housing market conditions, many homeowners find themselves wondering if remodeling their Portland home is worth it right now.
At Lamont Bros. Design & Construction, we’ve helped hundreds of Portland area homeowners transform their homes. Over the last few years, our team has encountered many homeowners wondering whether now is the right time to begin remodeling in the Portland area. Especially in times when the societal and economic futures seem unsure, it’s completely reasonable to second guess whether remodeling is the right decision.
In this article, we’ll discuss the factors that might influence homeowners in Portland to think carefully about their remodeling dreams before beginning a project. With this information, you’ll be able to decide for yourself whether remodeling your Portland home is worth the investment. The specific topics we’ll discuss include:
- How Portland’s Housing Market Might Affect Remodeling
- Current Economic Factors that Influence Construction Costs
- Whether You Should Remodel Now or Wait
Portland’s Housing Market: Navigating a Dynamic Economy
In a local and national economy that’s ever-evolving, Portland homeowners find themselves at a crossroads when considering an investment in home remodeling. The decision to remodel intertwines with a complex web of local and national factors, each playing its part in shaping homeowner choices.
Let’s discuss some key trends in Portland’s housing market that could influence your decision to remodel.
1. The Impact of Interest Rates on Portland’s Housing Market
The Portland housing market in 2024 is expected to have more stability than in previous years, albeit with still a few fluctuations.
As interest rates are expected to dip below 6%, the housing market in Portland could develop an imbalance of more buyers than available homes, driving the cost of homes back up.
Rather than try to purchase a home in such a competitive housing market, Portland homeowners might consider leveraging their available equity to remodel their existing homes. This approach can be particularly beneficial for those who have locked in low interest rates from previous years.
2. Entry-Level Neighborhoods: Opportunities and Challenges
Portland neighborhoods like St. Johns, Cedar Hills, and Milwaukie are drawing first-time buyers with more affordable, entry-level homes. However, these homes often require significant work, hence their entry-level pricing.
For homeowners in these areas, remodeling can be a strategic investment. Updating and renovating an entry-level home can not only improve living conditions but also potentially increase the property’s value over time.
Remodeling in these neighborhoods allows homeowners to customize their homes to their needs while capitalizing on the lower purchase cost. This approach is especially appealing to those who possess the vision and resources to transform these fixer-uppers into a home that can serve them well for the next several years.
3. Remodeling in Move-Up Neighborhoods: Garden Home and Raleigh Hills
In neighborhoods like Garden Home and Raleigh Hills, many homes date back to the 50s and 60s. These residences often benefit from updates, particularly in areas like kitchens and bathrooms, to meet modern standards of comfort and efficiency.
Homeowners in these areas are increasingly looking to remodel as a way to modernize their homes while maintaining their classic charm. One significant trend in remodeling in these areas is the move towards open floor plans. Homeowners are keen on transforming traditional layouts into more open, fluid living spaces.
Remodeling to achieve an open floor plan involves not just aesthetic changes but also careful structural considerations. It’s a substantial but rewarding investment for homeowners seeking a living experience that maintains its historic charm without sacrificing current styles or amenities.
Economic Factors Affecting Portland Homeowners’ Decision to Remodel
Understanding the economic factors that may affect Portland homeowners is essential to understanding whether or not it’s worth it to remodel right now. Let’s explore a few key aspects such as job security, the cost of remodeling, and market recovery in the Portland area.
1. Cost of Remodeling
Some Portland homeowners considering a remodel find themselves wondering if they should wait for inflation to slow down before embarking on a home renovation. Some speculate that perhaps even remodeling prices will go back down.
Unfortunately, the cost of remodeling rarely decreases and is more likely to continue increasing at a rate of about 5% per year. This trend is consistent, even in times of economic recession, where remodeling costs do not typically reflect the dropping costs of real estate.
During recessions, labor and material shortages often prevent significant price reductions in remodeling costs. In fact, The Great Recession in 2008 and 2009 were the only two out of the last 50 years to have seen even a slight drop in construction costs. During this time, there were instances of remodel contractors bidding jobs below actual costs due to high unemployment in the construction industry
Homeowners considering remodeling should be aware that postponing projects may result in higher costs in the future due to inflation and increasing material and labor costs.
2. Concerns About Market Recovery After Economic Downturns
Homeowners are rightfully concerned about taking out a sizable loan to remodel, only for a market crash to put them upside-down in their mortgage, owing more than the home is worth.
This concern is valid given that, historically, while home values tend to bounce back relatively quickly after a housing crash, Portland may lag in recovery.
In the last few years, Portland has shown a slower recovery in terms of employment and economic growth post-pandemic than other major US cities. This slower recovery rate could potentially affect the pace of a housing rebound in Portland in the case of an economic downturn.
Homeowners considering remodeling need to weigh the potential risks and benefits, understanding that while Portland’s housing market has always historically recovered from housing crashes, it may not recover as quickly as other regions in the event of a downturn.
Should You Remodel Your Portland Home?
With so many factors influencing the decision, it’s no wonder many Portland homeowners are torn about whether remodeling their home is worth it. Below are a few reasons why you may or may not want to proceed with your home improvement project.
Remodeling Your Portland Home Might be Worth It If:
Long-Term Residency Plans: If you see your Portland home as your long-term, or ‘forever home,’ remodeling can be a wise investment. This is particularly relevant given the popularity and growth in specific Portland neighborhoods like St. Johns and Cedar Hills. Making your home more suited to your long-term needs aligns well with the trend of increasing home values in these areas.
Family Growth and Old Portland Homes: In many of Portland’s older neighborhoods, homes may require modifications to accommodate growing families. Remodeling to add bedrooms, bathrooms, or to repurpose basements into living spaces can be a smart move. The historical charm of these homes, coupled with modern updates, can significantly enhance living comfort and long-term value.
Equity Accumulation in Portland Market: Many Portland homeowners have accrued substantial equity in their homes. Leveraging this equity for remodeling can be a sound strategy, especially considering the projected property value appreciation over the next few years. Even in a higher interest rate environment, this approach can be financially viable with the possibility of refinancing when rates become more favorable.
Remodeling Your Portland Home Might Not Be Worth It If:
Desire Over Necessity: If the remodeling is driven more by whimsical desires rather than functional needs, it may be prudent to reconsider, particularly in the face of Portland’s economic uncertainties. Non-essential remodels in a market that’s still stabilizing post-pandemic might not justify the financial outlay.
Short-Term Moving Plans: For homeowners contemplating a move in the near future, it’s worth evaluating whether remodeling is worth it in the interim. In Portland’s local housing market, where recovery and home value appreciation might be slower than in other cities, investing in extensive remodels may not yield a significant return if you plan to sell soon.
Economic Uncertainties: Given the current economic climate in Portland, including a cooling job market and the potential for slower recovery in housing values, homeowners facing financial uncertainties should approach remodeling cautiously.
Significant investments in home remodeling without substantial equity might lead to financial strain, particularly if the local market doesn’t rebound as quickly as anticipated.
Ready to Learn More About Your Remodeling Options?
After reading this article, do you think have a better idea of whether or not remodeling your Portland home is worth it? Now that you have a good understanding of the factors that affect your decision to remodel, continue researching your remodeling options. To better understand the style and remodeling opportunities within your Portland home, download our free Portland Home Styles Guide.
Think it’s time for you to start planning your remodeling project? If so, don’t do it alone! Click the button below to schedule a free design consultation with a member of our team. We’ll guide you through the remodeling process from start to finish so you never have to face the challenges of remodeling alone.