Jul 30 2007 9:02AM | Permalink | Email this | Comments (1) |
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More than anything this is an extension of last Thursday's post, where I wrote about the psychological effect of bad news on potential remodeling clients. On Friday, Hovnanian CEO Ara Hovnanian said he sees a lot of the problems in the new home market as being psychological. It's an idea I agree with, to a certain extent.

Certainly, in the new construction market, there are some fundamental issues caused by overbuilding, poor lending practices and the such, but I do believe some of the problems are caused by attitude. People's belief in their homes as a good investment has been shaken and, even worse, many of those who don't own a home are starting to think they're just not worth it. Everybody's waiting for the "bottom" before they jump into the market.

I think in remodeling this effect is even more pronounced, because for many people the ability to remodel is there. Most homeowners have built up a lot of equity over the last few years, but they're afraid to tap it. The fundamentals of the market are good, the economy is fairly strong and unemployment is low. But what I keep hearing from remodelers all over the country is that homeowners are too nervous to invest.

Admittedly, this is anecdotal. So what are you seeing in your market? 

We talk about this some more in our August issue, which will be on the Web and in your mailbox soon.