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Strategies & Market Trends : The Residential Real Estate Crash Index -- Ignore unavailable to you. Want to Upgrade?

To: saveslivesbyday who wrote (87451)	8/28/2007 6:04:48 PM
From: benwood	Read Replies (1) \| Respond to of 306849

One consideration of the cashouts for home improvements (a minority of the cashouts, I expect) is that the improvements rarely create a return of 100%. And in the next few years, those improvements are likely to have a lower return than historically: more homes priced themselves out of their peer market; others obtained must-have improvements (e.g. granite counter tops) that could easily become don't-need-it items in the resale market; and overall home devaluation putting the pressure on getting any return whatsoever on improvements.

To: saveslivesbyday who wrote (87451)	8/31/2007 9:30:11 AM
From: GraceZ	Respond to of 306849

So, the question is, how much of cash outs was spent on home improvement. If you follow CR's link you'll see it's not as easy as looking at where people spend the proceeds of a HE or HELOC you have to see what they did with the realized gain from the sale of their previous home, what they spend their income on as well as their credit card expenditures. People in high numbers use the cashout to retire credit card debt but some of that credit card debt is a direct result of them putting a lot of money into fixing up their houses. For the real info, you need to look at the totals spent on residential home improvement, it has been astronomical in the past 7-8 years. What people are willing to spend improving their houses rises directly with their perception of the increasing price that their house will fetch on the market. Measuring what people do directly with the proceeds of the home equity is only part of the info you need to determine where that money went. Money can only come from income, savings or borrowing. Even if you use your income to pay for one thing and the home equity cash to pay for another, you have to add everything together to see where money is actually flowing.