By ANNE D’INNOCENZIO

NEW YORK (AP) – Americans felt better about the economy in August, as a widely watched barometer of sentiment posted the biggest boost in two years amid falling gas prices. Meanwhile, two reports suggested that the worst may be over for the slumping housing market.

The Conference Board, a private research group, said Tuesday that its consumer confidence index rose to 56.9, up from a revised 51.9 in July. That’s the largest gain since August 2006, and is ahead of the 53 expected by economists surveyed by Thomson/IFR.

It’s also the second month in a row that sentiment improved, after a six-month slide since January — but it remains about half what it was a year ago.

“Consumer confidence readings suggest that the economy remains stuck in neutral, but may be showing signs of improvement by early next year,” Lynn Franco, director of The Conference Board Consumer Research Center, said in a statement.

The latest reports on housing, meanwhile, showed that the severity of the slump may be lessening. The Standard & Poor’s/Case-Shiller U.S. National Home Price Index showed home prices dropping a record 15.4 percent during the second quarter. However, the rate of single-family home price declines slowed from May to June, a possible silver lining.

Sales of new homes also posted an unexpected increase in July as heavily discounted properties lured cautious house hunters to become home buyers, according to the Commerce Department.

Falling gas prices in recent weeks helped boost consumers’ gloomy mood, Franco said. A national survey shows gas prices have dropped 15 cents a gallon in the last two weeks, according to the Lundberg Survey of 7,000 gas stations nationwide, released Sunday. The average price of a gallon of regular gasoline at self-serve stations was $3.70 on Friday.

Despite the drop, gas nationally was almost 95 cents higher than a year ago, and the volatility in oil prices are a big concern for investors. But Tuesday’s reports helped offset the impact of a spike in oil prices that rose out of concerns Hurricane Gustav might hit installations in the Gulf of Mexico in coming days. In late morning trading, the Dow Jones industrial average rose 47.71, or 0.42 percent, to 11,433.96.

The Conference Board’s Present Situation Index, which measures shoppers’ current assessment of the economy, declined to 63.2 from 65.8 in July. But the Expectations Index, which measures their outlook over the next six months, jumped to 52.8 from 42.7 in July. The 10-point increase marked the biggest increase since November 2005, when the economic fallout of hurricane Katrina was subsiding.

Franco said that declines in the Present Situation Index, both in term of business conditions and the labor market, appear to be moderating. She noted that an improvement in consumers’ expectations suggest better times ahead. However, “overall readings are still quite low by historical standards and it is still too early to tell if the worst is behind us.”

Economists and investors closely monitor consumer sentiment as consumer spending represents about two-thirds of all economic activity.

While economists say they can’t underestimate the relief among consumers to see gas prices come down, Americans are still faced with a number of big economic challenges as they head into the crucial fall and holiday selling seasons, from a weak job market to tight credit conditions and the housing slump.

The Standard & Poor’s/Case-Shiller report showed that 14 cities in the monthly index showed improvement from May to June, but nine recorded positive returns. And the government reported that sales of new single-family homes rose by 2.4 percent last month to a seasonally adjusted annual rate of 515,000 units, the most since April.

Still, the Consumer Confidence report — derived from responses received through Aug. 19 — of a representative sample of 5,000 U.S. households — showed Americans’ pessimistic about business conditions and jobs.

Consumers’ assessment of current conditions did not improve in August. Those claiming business conditions are “bad” increased to 33.2 percent from 32.6 percent while those who saw them as “good” edged up to 13.4 percent from 13.2 percent last month.

People’s appraisal of the labor market also turned bleaker. Those saying jobs are “hard to get” rose to 32.0 percent from 30.2 percent in July, while those who found them “plentiful” declined to 13.1 percent from 13.6 percent.

Consumers’ short-term expectations improved, but still remained negative. Those expecting business conditions to worsen over the next six months declined to 25.8 percent from 32.4 percent, while those expecting conditions to improve rose to 11.9 percent from 9.2 percent.

The outlook for the labor market was less gloomy. The percent of consumers anticipating fewer jobs in the months ahead decreased to 30.6 percent from 37.3 percent, while those expecting more jobs increased to 10.5 percent from 8.0 percent.

Many people are wondering where their money will be safest during these uncertain economic times. When home owners turn to you for your expert ad¬vice, counsel them that some things never change: Investing in their home still pays off.
NATIONAL ASSOCIATION OF REALTORS’ statistics show that home prices have fallen by an average of 7 percent nationally in the past year. But the value of home owners’ investment in remodeling projects has declined only 3.86 percent on average between 2007 and 2008, according to Remodeling’s 2008-2009 Cost vs. Value Report.
Remodeling produces the Cost vs. Value Report each year in cooperation with REALTOR® maga¬zine. Realtors® responding to a survey in midsum¬mer said home owners could expect to recoup a national average of 67.3 percent of their investment in 30 different home improvement projects. At the height of the housing boom in 2005, home owners could expect to recoup a national average of 86.7 per¬cent on projects.
Remodeling remains hot in 10 cities, where, on at least some projects, home owners can recover 100 percent of their costs. In Charlotte, N.C., for example, decks, midrange kitchen remodels, vinyl siding, and window-replacement projects all would net more than they cost, in respondents’ estimation. High rates of recovery were seen in both strong real estate markets and weak ones. Many cities with the highest rates of recovery were smaller—Jackson, Miss., and Billings, Mont., for example—which may point to lower labor and materials costs that are easier to recoup. (Billings, Mont.? Yep. This year’s report is expanded to include 79 markets—up from 64 in past years.) Seattle also made the list of cities with a cost recovery of more than 100 percent on decks and minor kitchen remodels. In fact, Pacific Coast cities recorded the best payback on remodel¬ing by a wide margin, as they did in 2007. Although construction costs on the Pacific Coast are nearly 17 percent higher than national averages, the value of renovations at resale more than makes up for those higher prices. The result is an average cost-recouped percentage that’s 14.8 percent higher than in the rest of the country. The toughest place to get your money back: Midwestern cities such as Chicago, Cleveland, Indianapolis, and Milwaukee.

Top Ten Project Paybacks
Once again, exterior remodeling projects lead the way for recovery on dollars spent in this year’s Cost vs. Value survey. When you compare the national averages, replacement projects that boost curb appeal— siding, windows, and decks—give you the greatest chance of recouping your money. Inside, only kitchen remodels can compare, at least on a national level.

Real Deal
REALTORS® around the country helped us track down home owners who had recently completed remodeling projects. In all cases, the projects cost far less than the job cost estimates provided with the Cost vs. Value survey. (Visit our Web site, REALTOR.org/realtormag, for specs used to estimate the job costs for these four projects.)

ATTIC-TO-BEDROOM OAK PARK, ILL.
When Rick Nagle and Eileen Deamer of Oak Park, Ill., spent more than $35,000 to convert the attic of their 100-year-old home into a combination master bedroom and office, “resale value wasn’t our concern,” says Deamer, a U.S. government employee and the married mother of two. The transforma¬tion turned 600 square feet of makeshift office with a toilet in the middle of the room to a colonial-style bedroom/office with two walk-in closets and an adjoining sage green bath with a walk-in shower. To allow two simultaneous uses, pocket doors separate the bedroom and office spaces.

BATHROOM FOUNTAIN HILLS ARIZ.“This is such a crazy market to try to judge how much a renovation is worth, but having a refurbished kitchen and bathrooms makes almost any house more salable,” says Shari Gay, ABR, sales associate at RE/MAX Sun Properties in Fountain Hills, Ariz. The owner – Gay’s sister – added Saltillo clay floor tile throughout the 1,800-square-foot home, including the new bathroom. Bathroom finishes included a new cherry vanity cabinet, a tile shower, oil-rubbed bronze fixtures, and a soothing, sophisticated yellow color scheme, which all add up to a great look. Total cost? About $5,000. “She’ll at least break even on the upgrades,” predicts Gay. “If this were a boom market, she would get even more.”

2008 Averages:

How we get the numbers.
Cost data are generated by HomeTech Information Systems, a remodeling estimating software company based in Bethesda, Md. HomeTech regularly collects current cost information from a nationwide network of remodel¬ing contractors and suppliers, then employs an adjustment factor to account for regional pricing variations.
The “resale value” is based on aggregated estimates provided by REALTORS Surveys contain¬ing project descriptions, construction costs, and median home price data for each city were sent by e-mail to more than 150,000 appraisers, sales associates, and brokers in July and August. More than 4,500 survey respondents used this informa¬tion to estimate the value that remodeling projects would add to the house at resale in the current market. Respondents were instructed not to make judgments about the motivation of the home owner in either the decision to undertake the remodeling project or the decision to sell the house.

Putting the Numbers to Use.
When comparing the data in this report to remodeling costs and resale values in your area, remember that averaging tends to have a leveling effect. On the cost side, what seem like small differences in project size or scope or in the quality of finishes and accessories can dra¬matically affect the price. A remodeling project that changes how a space is used-converting an existing bedroom into a master bath, for example-may meet a home owner’s imme¬diate need but be at odds with the needs of prospective buy¬ers, who may perceive the change as reducing the number of rooms. The cost recouped for a given project also depends on a variety of factors, including the condition of the rest of the house and the value of similar homes nearby. Where resale value is a major factor in a home owner’s decision to remodel, suggest that the owner consult with a reputable lo¬cal remodeler about actual construction costs, and talk with you about home prices in the neighborhood. For the national averages, the confidence level is 99 percent +/- 2 percent, based on 4,500 survey respondents. This means that 99 percent of the time, national averages in the survey will fall within 2 percent of this year’s survey results.

BASEMENT WEST BRIGHTON, N.Y.
In a modest 1950s ranch in West Brighton, N.Y., a midrange basement upgrade suited Bernard Fallon’s mother-in-law, Ligaya Nocon, just fine. After purchasing her home “on the high end of the market,’ according to Fallon, broker at Fallon Associates Realty in Rochester, N.Y., Nocon kept basement renovation costs under $9,000. She created a cottage feel by whitewashing the knotty pine paneling rather than replacing it. She also reupholstered the existing bar to cover wear and warmed up the room with wall-to-wall carpeting instead of wood or tile. “We just dressed it up for the personal enjoyment of my mother-in-law,” says Fallon, “but I think it will help sell the property later.”

KITCHEN HONOLULU
A kitchen is the heart of most homes. That’s why Hollywood set de¬signer Wally White decided to spend most of his $15,000 renovation budget on upgrading the kitchen of his Honolulu studio condo. To spruce up the existing white cabinetry, which he left to save costs, the owner added bursts of color with celadon green granite counter¬tops and walls painted in a complementary shade of light green. An undermounted white porcelain sink, a six-light halogen fixture on a dimmer, and brushed stainless steel faucet completed the look. It paid off. White grossed $45,000 when he sold eight months later. “The unit sold for more than any other studio-and most of the one-bedroom condos in the building,” says Susan Weinik, a sales associate with Realty Executives Oahu.

Why Renovation Pays
Why are renovations holding their value better than home prices today? “When housing slows down, people stay put and renovate their house to make it more livable,” says Paul Zuch, presi¬dent of Capital Improvements, a designing, building, and remodeling company in Dallas. And by renovating before they sell, home owners get to enjoy the new space themselves, not just make the home more appealing to buyers. “It just makes sense,” says Zuch.
Recent renovations also make buyers’ lives easier. “Home owners who remodel their home are providing a service to future buyers,” says Eileen Nelis, a broker at Savvy and Co. in Charlotte, N.C. “When buyers purchase, they don’t want to do all that painting and remodel¬ing, and they don’t want that price tag. They may be willing to make improvements down the line, but when they purchase, they want to open the door and have everything complete. It reduces their stress.”
Making home improvements can also reduce sellers’ stress by heading off that time-honored negotiating technique-pecking away at the sales price by pointing out imperfections. “If sellers have done some improvements and dressed up their property, the improvements will help sell it,” says Bernard Fallon, broker at Fallon Associates Realty in Rochester, N.Y. “If sellers don’t want to improve their property, buy¬ers will tick off the repairs and try to take them off the price.”
That doesn’t mean that every home owner should do every reno¬vation, even in a more stable real estate market. Take Tulsa, Okla., where median home prices actually edged up slightly more than 2 percent in 2008, according to NAR. REALTORS® in Tulsa reported that, of the 30 remodeling projects surveyed, only 16 netted home owners at least 80 percent of the cost. “Not every neighborhood will support the additional work,” says Jim Hemphill, a sales associate at Coldwell Banker Select in Tulsa, “but in older, more established neighborhoods, if you redo a kitchen or bathroom or add a master bath or bedroom, you’ll get your money out.
Despite the value, the weak economy is likely to slow seller spending on remodeling, at least in the short term, predicts the most recent Leading Indicator of Remodeling Activity computed by the Joint Center for Housing Studies at Harvard University. The LIRA for the third quarter of this year estimated that owners’ spending on home improvements will decline at an annual rate of 12 percent by the second quarter of 2009, continuing a two-year downward trend. Spending is unlikely to recover until the housing market turns around, according to the Center.
Yet, despite declines in overall remodeling dollars spent and a still shaky housing market, ‘people’s homes are still one of their best, most solid investments,” notes Zuch. “Even though the markets have gone through some adjustments, it’s still smart to invest in your home.”

The extensive tabulated data that accompanies this article can be reviewed at the Remodeling Magazine website: http://www.remodeling.hw.net/2008/costvsvalue/national.aspx

The decision to remodel is always optimistic. Homeowners aspire to reinvent their nest to enhance lifestyle or expand space, within budget and on time. Yet, that decision should also be a shrewd one. The canny homeowner remodels to make money, too — a concept driven by one basic principle.

Some remodeling projects are more cost-effective than others. They provide more bang for the buck when the house is sold. There are consistent money makers even in uncertain times, according to Remodeling magazine’s 2007 Cost vs. Value report, an annual analysis of national remodeling trends.

The addition of a wood deck, kitchen and bath remodels, attic overhauls and basement fix-ups are the top money-back projects, according to the report, recouping some of the highest percentages of their original costs.

“Resale value is part of what people should consider when they remodel, though it may not be at the top of their list,” says Sal Alfano, editorial director for Remodeling M agazine. “The information is a useful tool to help homeowners gain some context and give them a feeling for what is happening in the market.

“No one wants to overbuild in their neighborhood and end up with the most expensive house on the block, what with all the gloom and doom news about real estate these days,” Alfano advises.

Exterior projects also yield considerable financial gain. Siding and window replacements typically recoup well above 80 percent of their cost, the report found.

“It underscores the continuing importance of curb appeal,” says Dick Gaylord, president of the National Association of Realtors.

“When considering a remodeling project, particularly with an eye toward resale, it’s important to evaluate your home’s current condition, how the project will change the existing space in your home, (and) how your remodeled home will compare to other homes in your community,” Gaylord adds.

The National Association of the Remodeling Industry (NARI) advises homeowners to save money by planning ahead.

“Go through the design process first and choose everything you want to include in the new room(s), from appliances to light fixtures, etc. This will define your budget and prevent hasty (and costly) decisions later in the project,” the group says.

“Be sure to include all your product and material selections in the contract to avoid confusion and unnecessary change orders. Include the model, size, color, and other specifications. It is also wise to save 10 to 20 percent of your budget to allow for items added to the scope of work.”

Investing wisely:
5 remodels with the best returns
How much can you make from remodeling project? Some of the best investments include window and siding replacements, from which you can recoup over 80 percent of your investment on resale, according to the 2007 Cost Vs. Value report from Remodeling magazine But when you’re remodeling entire rooms, the following five projects will get you the most bang for your buck. Projects to avoid, on the other hand, are sunrooms and home offices, which return only slightly more than half your investment. For a complete look at the marketplace, check out the report itself: www.costvsvalue.com
DECK ADDITION Scope: New 16-by-20-foot deck using pressure-treated wood, built-in bench, planter and railing.
Job cost: $10,347 Cost recouped: 85.4%
BATHROOM REMODEL Scope: Update bath with new tub and ceramic tile surround, toilet, solid-surface vanity counter, tile floor and vinyl wallpaper.
Job cost: $15,789 Cost recouped: 78.3%
MAJOR KITCHEN REMODEL Scope: New semi-custom cabinets, laminate countertops, double sink, major appliances, custom lighting, resilient floor, 3-by-5-foot island.
Job cost: $55,5030 Cost recouped: 78.1%
ATTIC BEDROOM Scope: Convert unfinished space to 15-by-15-foot bedroom with bath, new windows, insulation, finished ceiling and walls, carpet, heating and air conditioning upgrades.
Job cost: $46,691 Cost recouped: 76.6%
BASEMENT REMODEL Scope: Create an entertainment area with wet bar, auxiliary room, upgraded bath, new cabinetry, insulation, doors, laminate floor, recessed ceiling and lighting.
Job cost: $59,435 Cost recouped 76.6%

The Projects: Five successful remodeling projects showcase stylish reinventions of old space that tickled the homeowners —while offering plenty of appeal for future residents.

DECK

Remodeler: Archadeck
Homeowners: Jeff and Lynne Zucchi
Five pertinent details:
• Three levels for dining, quiet reflection and hot tub reveries.
• Design boasts ipe, a Brazilian hardwood, plus stainless steel railing.
• Built-in enclosure for garden hose doubles as seating.
• Natural wood and dramatic layout is integrated into greenery.
• Custom lights twinkle on at sunset with a dedicated timer.

It was the ipe wood that inspired them. Homeowners Jeff and Lynne Zucchi fell in love with the deep cherry hues of this exotic hardwood, along with its strength and durability.
“It’s going to be on this planet longer than we will,” says Jeff, who spent months mulling over a design that could graciously incorporate three levels of outdoor activities in a verdant, seven-acre lot.
The finished deck stands 15 feet above a custom stone patio and splendidly offsets the newly built cedar shingle home. A series of diminutive staircases lead from one level to the next, and wiring, a gas main and the garden hose are slyly hidden in built-in enclosures.
The Zucchis are particularly drawn to their intimate “overlook level,” which has room for just four chairs, along with the deck’s seasonal benefits — a hot tub in autumn and winter, fresh plantings in spring and icy cocktails or alfresco dining in summer.
As for the remodeling experience, “Get involved in the planning process, and take your time. Be specific and picky, and don’t shy away from making the design exactly what you want. Draw it out on paper,” Jeff says. “We changed the location and size of our hot tub four times until we got it right. But when we’re bubbling away at sunset, we know it’s all worth it”

Kitchen
Remodeler. John Clayborne & Jay Morgan
Homeowners: Angie & Billy Bayne
Five Pertinent Details:
• Built-in banquette maximizes space.
• Polished travertine marble on backsplash and floor.
• White moldings and plantation shutters offer a clean, traditional look.
• Lighting for task and ambience: 11 recessed lights and a dramatic chandelier.
• Glass sliding door and side windows replaced by much needed custom cabinetry.

Generous marble and granite surfacing, top- of-the-line appliances from Wolf, Sub-Zero and Blanco and custom cabinets from Medallion: This is truly a high-end kitchen reinvention, but one that stayed on message.
“The original space was like a cave in many ways. I wanted a traditional kitchen, and one that used every bit of space efficiently,” Angie Bayne says.
Original plumbing connections were reconfigured to create a more productive workspace; storage got a boost after new cabinets were installed to replace a glass sliding door and adjacent windows. Variations in lighting suitable for cooking and dining were installed with a practical eye; each uses a separate control panel.

And while much of the kitchen is a showcase for gleaming whites and ivory, the kitchen also incorporates Venetian gold granite across countertops in a fearless nod toward luxury —and a little culinary extravagance.
“The best strategy is to give yourself a lot of time to make selections, whether they are appliances or countertops. Don’t be hasty. It can be complicated when you have an eye on resale, but it can be done. I just tried to keep my mind on classic kitchen details,” she says.

Attic Bedroom
Remodeler: Sylvestre Construction
Homeowners: Vanessa Matiski and Mike Leitner
Five Pertinent Details:
• Window added over the bed alcove for extra light – and as an escape in case of fire.
• Architecturally inspired moldings and white trim add formality.
• Built-in cabinets hide heating ducts with panache.
• Sophisticated lighting and a plum/ivory palette are cozy but sumptuous.
• Sunny bath features in-floor heat and a new plumbing system.

Designed by architect and homeowner Vanessa Matiski, the 500-square-foot space features details inspired from the floors below, from glass-fronted built-in cabinets to gleaming wood floors. But there was some significant restructuring work to be done, as well.
“We dropped the ceiling on the stair landing to reduce the pitch of the very steep roof, then raised the height of the twin dormer windows to pick up some head room,” Matiski says. “The paint colors and trim were meant to highlight the overall architectural details of the house. And there are no draped fabrics hiding the windows. I wanted them to stand out”
Older homes, she adds, hide a lot of unused space.

“See if you can discover the hidden potential under those eaves,” Matiski adds. “Patience is vital, too. A project like this can take longer than you anticipate. This one went on for six months, but the reward of returning to such a personally comforting retreat is wonderful at the end of a long day.”
An architect and his wife saw the potential and the value — hiding under the rooftop of their 1920s-era bungalow.
“The top floor was once a rental unit during World War II, up there under the eaves, with low, sloping ceilings, plus a tiny bath and kitchen area,” says architect and homeowner Damian Parsons. “But I have two young children. My wife, Evangeline, and I decided that we needed a decent bath.”

BATH
Remodeler: DE-Design
Homeowners: Damian Parsons and Evangeline Elizondo
Five Pertinent Details:
• Handsome neutral palette.
• Sparkling and petite shower window.
• New teak wood shower shelf and flooring.
• Reclaimed, faux finished sink cabinet.
• Tiny bath + old galley = sophisticated spa.

The couple decided to literally raise the roof, adding a cathedral ceiling and removing existing walls between the unrelated areas, wisely retaining original plumbing connections for their budget’s sake. The maneuver also created space for a sizable new linen closet. Two original windows were retained and an unusual third added to the interior of a luxury shower, which also boasts a custom-fitted teak shelf and flooring. An extra long tub — more than six feet — can accommodate energetic kids, plus Mom and Dad when they crave a spa experience.



“We went with a big, fluid space, using etched glass in the entry and on all the windows for privacy and lots of natural light. The interior was pulled together with neutral colors and simple lines,” Parsons says.
The couple found the double sink cabinet in the classifieds for $120; Evangelina stripped the unit, applied a faux finish in pewter gray and ivory paints, and added sleek new hardware. Mirrors, wall sconces, lighting, ceramics and other details are stylish but reasonably priced. Standard 4-by-4-inch limestone tiles underfoot also kept the budget in check.
“We got a lot at IKEA and Home Depot’s Expo. Its low-budget stuff used creatively,” Parsons adds.

BASEMENT
Remodeler: Bartelt Fib
Homeowners: Tom Riley and Barb Ashworth
Five Pertinent Details:
• A petite archway frames the view of a vineyard-themed bar area.
• Custom-arched pine door and windows further the provincial look.
• Concrete countertops with a multi-hued acid stain resemble granite.
• Cork flooring, gas fireplace and a copper backsplash were inspired by visits to wineries in Italy, California, Oregon and Canada.
• A sense of permanence: stone wine storage and massive ceiling rafters.

Space to suit both their romantic style and their collection of wine was the priority for homeowners and newlyweds Tom Riley and Barb Ashworth, whose home overlooks a pristine lake.
“We originally had a finished basement with a wet bar, lots of cabinets and not much light. The whole thing looked like one big downstairs kitchen. One of our hobbies is visiting lots of wineries; we began borrowing ideas from what we saw,” says Ashworth.
Those visits inspired a staircase bolstered with impressive wrought iron balustrades and a gas fireplace framed in a massive, ceiling-high masonry enclosure. Wood beams accenting the ceiling were hand-pounded for an authentic artisan look.
“The most important thing in a project like this is to have the interior decorator work in concert with the (remodeler) on those details, from the lighting and brickwork to the hand-pounded beams. It’s important that both sides are truly comfortable with each other.”