Americans Downsize Home Improvement Projects: 5 Things to Know

In the face of an uncertain economy, Americans are making fewer large-scale home improvements.

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Despite some encouraging developments on the housing and economic horizon, Americans aren't ready to plow their money back into large-scale home improvement projects just yet, according to ServiceMagic.com's Home Remodeling and Repair Index for the second quarter of 2009. The report, released Wednesday, found that requests for contractors to make home improvements fell to 54 percent of total service requests in the second quarter of 2009, down slightly from 57 percent a year earlier. And while consumers were taking on fewer big-ticket improvement projects—such as additions—interest in smaller projects, like countertop resurfacing, increased sharply.

Here are five things to know about the recent trends in the home improvement sector.

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Smaller home improvements: Americans continued to refrain from making large-scale home improvements in the second quarter, as house additions and multiple room remodeling requests dropped 14 percent from a year earlier. Requests for certain smaller home improvements, however, sharply increased. New awning-related projects jumped by nearly 50 percent, glass and mirrors increased by 35 percent, and window coverings rose by nearly a third. "Activity on the whole is not down all that much," says ServiceMagic.com chief executive Craig Smith. "[But] it's going more to the maintenance, more to the lower-end improvements that increase the home's live-in value but aren't the high-end fancy remodels that we had before."

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Kitchen and bath: Requests for kitchen and bath projects showed a sharp increase in the most recent quarter. Kitchen remodeling requests fell 19 percent from the first quarter of 2008 to the first quarter of 2009. In the second quarter, however, kitchen requests increased 4 percent from the same period a year earlier. And after posting a 10 percent year-over-year drop in the first quarter, bathroom remodeling requests also rebounded in the second quarter, increasing 11 percent. "I think it is that there is a lot of pent-up demand right now," Smith says. "People have held off on doing these projects for a long time." And while they may not be confident enough to green-light a large home-addition project, they are willing to move forward with more modest bathroom and kitchen projects, he said.

Baby boomers: Baby boomers—Americans ages 45 to 64—made by far the most home improvement requests of any demographic group, accounting for more than half of the total pie. Although they're facing the same economic pressures as everyone else, baby boomers are "leading that charge because of [higher] disposable income, aging homes—they have been in their homes longer—and they are looking at it as a longer-term investment," Smith says.

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Home theaters: The report also notes that Americans continue to put cash into more expansive home theater and home entertainment spaces. Audio, visual, and computer requests jumped 29 percent in the quarter, after surging in the first quarter as well. "The cost of that technology has come down," Smith says. "HDTVs, plasmas, and installation are relatively inexpensive, so you can make a really nice living space in your basement and don't have to go out to the movies and travel."

Moving: In addition, moving requests declined by 42 percent in the second quarter from a year earlier—a result of the still-sluggish housing market, which makes it tough for homeowners to pull up stakes. The trend has been a "huge drag" on the home improvement business because "people do more in the first six months of buying or selling a home than they do in the next six years," Smith says.