Remodeling Becomes Status Symbol

Daily Real Estate News 

At the height of the real estate boom in 2005, Americans spent more than $180 billion on home renovations, according to Harvard’s Joint Center for Housing Studies.

Nationwide, according to the Harvard researchers, renovation expenditures fell an estimated 2.3 percent in 2007 and will continue to decline in 2008.

But in neighborhoods that are relatively untouched by the housing bust, there are still plenty of dumpsters in the driveways.

Cornell economist Robert Frank, author of Luxury Fever, hypothesizes that people renovate homes because they see others doing it. He says that even people who aren’t particularly materialistic look at their neighbors and say, “‘He has something nicer than I do, and I feel bad about it.’ … They decide to renovate not just aiming to impress people, but to feel that they are treating themselves right,” Franks says.

Source: The Boston Globe, Daniel McGinn (02/24/08)