SmartMoney Magazine's Cover Story by wanghonghx


									Smart Money Magazine's
Cover Story
The Comfort Craze                                         By Jim Rendon Published: April 17, 2006

As the housing market cools down, home renovators are focusing on pampering themselves instead of
pleasing real estate agents. Call it "remodeling for me."

                             In This Stor y:
                              The Family Spread
                              Colossal Kitchens
                              Masterful Bathrooms
                              Massive Bedrooms
                              Outdoor Living
                              Building Under the Stars
                             Also See: Financing That Remodeling Project

IN A GATED BATON ROUGE subdivision of neocolonial houses, Keith Cox's place stands out — because
an entire wing is covered in building wrap. But when he walks through those half-completed rooms, Cox
sees beyond the sawdust and exposed pipes to what's taking shape: a lavish tribute to family and comfort.
He talks excitedly about the chef's kitchen with a 20-quart pot for crawfish and gumbo he'll store in an
ergonomic sliding cabinet. He gushes about the vaulted-ceiling family room, where his three children will do
homework and, more often, do battle on the Xbox. And his fantasies wander outdoors, too: Cox daydreams
about spring afternoons, when he'll not only cook at his elaborate outdoor grill station, but sink a few balls on
his own private putting green. "I want this to be the place where the kids b ring their friends," he says.

Not long ago homeowners like Cox might have been more interested in impressing real estate agents than
in pleasing their teenagers. After all, when real estate prices were booming, a wannabe Bob Vila couldn't so
much as replace a soap dish without giving some thought to how the project would increase his home's
value. But if there's an upside to today's cooling housing market, it's this: Folks who want to remodel are free
to focus on themselves. There's "a desire to have something no one else has, to customize, to make the
home their own," says Vince Butler, chairman of the Remodelors Council for the National Association of
Home Builders. And in doing so, families are turning their homes into plush gathering places full of crea ture
comforts. Call it "remodeling for me."

In some ways, this new quest for the nest is reshaping the home itself. Kitchens are getting bigger, filling up
with fixtures designed to make cooking as convenient as possible for amateur chefs. Those kitchens n ow
open onto couch-potato-friendly family rooms where socializing, homework and TV all happen at once. And
the nesting impulse means more than sledgehammers meeting walls: It's in the details, manifesting itself in
everything from plush sectional sofas to spa-style multiple-head showers. Best not to dwell too long on the
topic of heated toilet seats, but sales of one company's bun-warmers were up 20% in 2005. The movement
has also spilled to the outdoors, where the whole idea seems to be forgetting that you 've left the house. The
humble barbecue now sits alongside refrigerators and storage space, so grill -masters won't face too many
trips to and from the kitchen. And some homeowners are even erecting entire new buildings outdoors —
from pavilions with fireplaces to $50,000 tree houses — where a weekend warrior can nap without worrying
about sunburn or summer showers.

This comfort splurge is actually happening during a slowdown for remodeling in general. In 2005 home -
improvement spending rose just 4%, to $149.5 billion, after averaging annual growth of 9% between 2000
and 2004, according to the Harvard Joint Center for Housing Studies. But the focus of that spending is
shifting in revealing ways. Take a look, for example, at bathroom renovations, a remodeling c ategory that
consistently adds a lot to resale value. Although there are still plenty of bathroom makeovers under way,
overall spending has bogged down. At the same time spending on outdoor projects — those great enablers
of lazy afternoons — has soared, rising by 47% in 2004 to $21 billion, according to the Census Bureau.
Meanwhile, changing tastes are making waves in the aisles at Home Depot. The huge home -improvement
chain saw double-digit earnings and revenue growth in 2004 and 2005, and some of its big gest sales surges
are in high-end product lines that help homeowners pamper themselves. Elaborate barbecue grills and
restaurant-quality kitchen appliances are claiming more and more shelf space, and last fall Home Depot
launched 10 Crescent Lane, a spinoff retailer that sells plush furnishings like wicker armchairs and $1,500
outdoor loveseats.

Indulgence for the id doesn't come cheap. Some popular renovations require the rerouting of plumbing and
electrical wires — costly jobs fraught with hassles. The increasingly popular natural-stone patio can run $25
a square foot, more than double the cost of concrete, turning even a modest project into a $10,000
endeavor. And some in-demand amenities are energy suckers, which can hurt homeowners in an era of
$60-a-barrel oil and climbing natural-gas prices. All the more reason to choose carefully when putting
together your home wish list. That's where we come in: We've polled designers, architects and other experts
about projects in six different areas inside and outs ide the house. Here, we catalog the perks, drawbacks
and costs of expanding your home's comfort zone.

Page 2 of 8)

The Family Spread
For evidence of the growing comfort craze, look no further than the growing American living room.
Traditionally, most homes were built around a series of smaller spaces, including a formal dining room and
living room that might showcase the family's best furniture but didn't get much everyday use. Today,
however, comfort trumps formality, and in new upscale homes, formal rooms rarely get built: Instead, open-
plan family rooms are the hub of the house. "We've started building homes for people who entertain more,
where people can spread out but still see each other," explains Kevin Scott, vice president of architecture
and design at national homebuilder Centex, whose family rooms in newer floor plans are more than 60%
larger than traditional living rooms. "There is a whole lot more of that now than ever before."

And not just in new homes: Plenty of homeowners are adding elbow ro om without changing addresses. The
'70s-era home of Cindy and Hampton Oberle in Annandale, Va., had all the hallmarks of the decade: low
ceilings, tiny rooms. "The whole layout was chopped up," Hampton recalls. So last year, down came the
walls. Now the centerpiece of the home is a spacious family room with a 12-foot ceiling, a space that
swallows up the smaller, fussier formal dining room. While the television serves as an anchor, it doesn't
dominate: Visitors feel just as comfortable eating or chatting as they do watching a big game.

Thanks to spaces like these, media rooms — where TV watchers are isolated from the rest of the family —
are falling out of fashion. Homeowners are finding that they can squeeze more entertainment equipment into
their family rooms, thanks to the flat-screen-TV revolution. The average prices of plasma and LCD sets fell
25% in 2005, while the number of sets sold rose by 80%, to 5.1 million. When Don Dillon remodeled his
Scottsdale, Ariz., home, out went the bulky living-room media center. In its stead he has a 60-inch wall-
mounted plasma TV. Granted, there's one challenge that even a big family room can't eliminate: Figuring out
where to hide the increasingly elaborate — and usually unsightly — components of the rest of the audio-
video system. Dillon wound up building an extra pantry off the garage where he could stow the gear, but
there are less extreme options. Furniture retailer Drexel Heritage, for example, has seen a big increase in
sales of low, sleek media centers that show off the television but hide the DVD player and wiring.
Meanwhile, with more homeowners eating lasagna in the same room where they watch Lost, furniture
makers are ensuring that more of their products can, well, multitask. Crate & Barrel's bestselling sectional
sofa, for example, is covered in stain-resistant microfiber suede. "You can't use something fragile in a space
where everyone lives all the time," says Michelle Wempe, residential forum adviser for the International
Interior Design Association.

Another kind of multitasking is also invading the living room. As wireless home networks become more
popular and easier to install, telecommuters who used to huddle in a spare room with their bulky PCs and
tangled cables are now untethered and free to join their families. That has made home offices, in general,
less popular: In 2005 the average home-office remodeling job recouped only 73% of its cost, the least of any
type of renovation, according to Remodeling magazine's "Cost vs. Value Report." But think careful ly before
you bulldoze your own workspace. If you frequently find yourself putting the finishing touches on quarterly
reports from your home laptop, you may not want to share a room with two tweens going head -to-head at
Madden NFL 2006.

(Page 3 of 8)
Colossal Kitchens
Today's kitchens aim to pamper home chefs as much as their family rooms pamper their guests. The kitchen
itself offers more elbow room: In new homes, the amount of counter space alone has expanded more than
50% in the past decade, according to The Freedonia Group, a market-research firm. Meanwhile, inspired by
celebrity chefs and the Food Network, homeowners continue to flock to shiny accoutrements of the
professional kitchen, like high-end commercial stoves. New-home buyers are no different. Last year KB
Home saw spending on appliance upgrades grow by 40%. If that trend leaves you skeptical, you're not
alone. "People think that if they had a nice kitchen they'd be like Julia Child," says Vince Butler of the
National Home Builders Association. "Is that the truth, or is this the Jacuzzi tub of our day?"

In fact, a smart, functional layout can be a better investment than fancy gadgetry. As trivial as it may sound,
much of the physical strain of cooking comes from carrying food and crockery from p oint A to point B:
Shorten that journey, and cooking will feel less like work and more, well, comfortable. So architects are
working to minimize the distance from sink to refrigerator to stove. In laying out his "dream kitchen," Keith
Cox, who has a mania for Cajun cooking, worked with his architect, Kevin Harris, to ensure that he wouldn't
expend too much energy running from one end to the other. He invested in a warming drawer, a $900
appliance that keeps finished dishes warm while the rest of the meal is cooking. He also has a vegetable
sink on his kitchen island — again, saving steps. And the cabinets all have sliding drawers so that he can
find his stockpots without having to fish around for them.

Some folks seeking simpler projects are transforming their kitchens by reworking their islands. It's not
uncommon to find islands that measure 5 by 10 feet — bigger than some apartment dwellers' entire
kitchens. Renovators are adding natural-stone counters, whose sales have risen more than threefold since
1999. Many are using unusual materials like limestone flecked with fossils — hardly the kind of move you
make when you're thinking about flipping your home, says Jennifer Mapes, an analyst at Freedonia.

(Page 4 of 8)

Masterful Bathrooms
Every workday at 5 a.m ., electric heating pads click to life under the tiles of Robert Tardiff's master
bathroom. An hour later, when he and his wife begin their day, the floor is toasty and inviting: "You can walk
around in your bare feet without getting jolted from the cold," he says. Of course, a pair of fleece slippers
would have been cheaper — installing a heated floor in an average-size bathroom starts at $1,500. But it
was only the beginning for the Tardiffs. When they remodeled the space in their Vienna, Va., home, they put
in Italian tile, a skylight and cherry cabinets. Their shower is the highlight: Surrounded on three sides by a
custom glass enclosure, with eight jets that spray water from all directions, it's a little oasis of spa luxury.
"We went top drawer across the board," Tardiff gushes.

Recognizing that every da y includes substantial time in the bathroom, more homeowners are treating it like
a refuge. Natural stone tile, prized for its irregular, customized look, is edging out less expensive material.
Heated towel bars are in demand, to go with those heated floors. And the Japanese firm Toto is building a
new factory in Me xico devoted to heated toilet seats — just to meet American demand. Multijet showers like
the Tardiffs' fall into the same, self-indulgent vein, with costs for materials running between $6,000 and
$10,000. But be prepared to pay an even bigger price for the luxury, because these showers are hot-water
hogs, says Everett Collier, president of the National Association of the Remodeling Industry. Th e y typically
use 15 gallons per minute — at least six times as much as a low-flow shower head. When Fredda Lerner
installed a six-jet spa shower, she was surprised to learn that she also needed a new water heater —
potentially a $2,000 job — to handle the load. And with natural gas so expensive, she's keeping that heater
turned down low, which means she has to remember to crank it up every time she wants to use all the jets.
(Thank goodness she really, really likes the shower.)

There's a cheaper and lower-maintenance alternative for bathroom luxury: the good old-fashioned bathtub.
Not the loud and often unhygienic whirlpool tub, either — instead, homeowners are gravitating toward
equally decadent but less flashy deep-soaking tubs, which range from $1,900 to $6,000. When Patricia Rock
remodeled her Mendocino, Calif., ranch house, she put in a raised tub surrounded by frosted windows. "I
can feel the warm breezes at night," Rock says. "I want to soak in the tub right up to my chin. It's very
Massive Bedrooms
When Robert Blanche reconfigured his 7,000-square-foot, 1930s-era home in Louisiana, he laid out a
suitably grand master-bedroom suite, including a walk-in closet and a huge bathroom with a soaking tub. But
one feature particularly tickles him — the built-in audio speakers and control panel. The setup connects him
to his big music collection, saving him trips to and from the rest of his stereo equipment, which is several
rooms away. And Blanche only wishes he'd installed something similar for his home's lighting, because
"walking around the house turning off the lights takes 10 minutes."

The master bedroom is usually a lower remodeling priority than the kitchen or living room, where the whole
family can converge. But those who are sprucing up the boudoir are increasingly opting for "built-ins." Along
with labor-saving electronics systems like Blanche's, customized cabinets that cut down on clutter are in
heavy demand. Other homeowners are solving space problems by annexing adjacent rooms, adding a gym,
a library or a foyer-like area where someone can watch television without disturbing a sleeping spouse.
When Blanche's youngest children graduate to a bedroom down the hall, he'll absorb their adjacent room
into his own.

(Page 6 of 8)

Outdoor Living
Americans spend consistently on outdoor projects, regardless of what the housing market is doing. But
these days, homeowners are not spending to show up the neighbors — unless they're having those
neighbors over for a slab of ribs. Between now and 2008, Freedonia Group expects sales of outdoor
furniture and grills, the essential tools of suburban relaxation, to grow at an even faster rate than overall
outdoor spending, at 5.4% a year. Meanwhile, front-of-the-house landscaping, often designed with "curb
appeal" in mind, is losing ground. "The idea of the front lawn as a showpiece is going away," says Michael
Dollin, principal of Urban Earth Design in Phoenix, in favor of "recapturing the backyard as livable space."

Some homeowners recapture more yard than they really need. Weekend chefs often overspend on outdoor
cooking appliances — not hard to do, when top-of-the-line grills can cost up to $10,000 and require hookups
to natural gas lines. For most, that's excessive, Dollin says: "There are plenty of good br ands out there for
under $1,000." But when well tailored to a family's needs, an outdoor project can transform a home. When
Tom and Lisa Starr had a dinner party at their Swarthmore, Pa., home a few summers ago, they were
disappointed that so few of their 75 guests explored their large yard. So last year they o verhauled the space
with a $12,000 renovation job based around two flagstone patios. On one, Tom set up a stainless -steel 36-
inch grill with a rotisserie attachment surrounded by a blue-slate L-shaped countertop; even in cold weather,
Tom says, "I grill every chance I get." And this spring they're rolling out new lounge chairs to take over the
other patio, in a secluded nook surrounded by old trees. Thanks to the comfortable space, the Starrs are
looking forward more than ever to their soirees: "It's a pleasure to be out there and look back at the house,"
Tom says. "It's beautiful where we live."

Building Under the Stars
The biggest drawback to the backyard "room" is unpredictable weather: No one uses their patio in a
hailstorm. One classic compromise is the old-fashioned screened-in or glassed-in porch, which adds some
climate control to the outdoor experience. But homeowners in growing numbers are going one step further:
adding entire freestanding structures to their yards. "We see people asking for cabana houses, entertaining
houses, arbors," says Kevin Rice, owner of Innovative Landscape Design in Lambertville, N.J. "People are
seeing that the landscape can be built."

At the high end, projects can get lavish and whimsical. Designer Roderick Romero builds tree-house retreats
— taking "nesting" literally — for celebrities like Sting and fashion designer Donna Karan, with hand -
fashioned details including stained-glass windows and copper roofs. But there are plenty of options that are
more quaint and simple. You can buy a wooden arbor, for example, with benches for reading and lounging
and plants stretching over a trellis -like roof, for prices starting at $3,000. By creating a bit of sheltered space,
these structures make outdoor entertaining a little easier. Patricia Rock, whose Mendocino home sits in the
middle of a vineyard, often hosts large parties; she's now building a pavilion just off her patio — open on
three sides, but with a fireplace to take the chill off a cool evening.

And homeowners who feel more ambitious — and are willing to put up with the hassles of getting more-
complex building permits — can always create a second home right in the yard of their first. "Spring houses"
and cabanas with bars, bathrooms and full living-room furnishings have been gaining traction. And those
who already have outbuildings on their property have a great head start. Robert Blanche converted what
was once a 15-by-20-foot garage into a retreat for him and his six kids. He added French doors, opened up
the ceiling so that the beams are exposed and added dormer windows to bring in more light. The room now
has a high-end digital video projection system, a bar and a sprawling sofa. Come to think of it, it could easily
be mistaken for Blanche's family room. That's typical of homeowners in this comfort-crazed era: They're
never more than a few steps away from a place to relax.

(Page 8 of 8)

Financing That Remodeling Project
With interest rates climbing and home values stalling, securing financing for a major remodeling job is no
easy task. But lenders, facing an expected slowdown in borrowing this year, are eager to make loans and
there are plenty of options to consider. Here are some of the best approaches.

Home equity
These loans are usually the first stop for remodelers. In addition to the traditional fixed -rate home-equity
loan, home-equity lines of credit have been gaining in popularity, especially for projects that may require
payments in stages. With a line of credit, you borrow the funds you need when it's time to pay for, say, that
deep soaking tub. You only pa y interest on the sum that you've borrowed and the balance remains available
to you if you need it. Unfortunately, these loans almost always have an adjustable interest rate — a
drawback in this era of climbing interest rates.

Depending on the rate you have locked in for your primary mortgage and how much your home has
appreciated, it may make sense to completely refinance, take out the cash you've accrued and put it into
your renovation. This is expensive and, with interest rates up, rarely an option for those who bought or
refinanced in the last few years. But for those that are paying more than 6%, it may be worthwhile to ask
your bank to run the numbers.

Low equity loans
Haven't built up much equity in your home yet? The Federal Housing Administration has a few programs to
help renovators in these cases. Title One loans are designed for basic repairs of up to $25,000. They don't
require any equity in the home and can be obtained through commercial banks. But you can't pay for much
with a Title One loan: Luxury items such as hot tubs or pools are out. If you're considering buying a fixer -
upper, the FHA's 203(k) program lets you borrow 125% of the home's value in order to renovate. But in a
slowing market, this may be a bit of a gamble.

The real estate boom is just like any other: Following the money is a parade of opportunists hoping to siphon
off some of your cash. Any loan secured by the equity in your home where the monthly payments are out of
reach is setting you up to lose your property. Also beware of lenders that want to refinance often; this
process is riddled with fees. And, of course, read the fine print — all of it. Unscrupulous lenders may want
you to sign a loan that is different than the one you agreed upon.

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