During the housing boom, many borrowers took out home equity lines of credit (HELOCs) in order to fund property renovations. Now, HELOC cut backs are forcing borrowers to reconsider these improvements.

The Wall Street Journal reports:

“All this is dinging the remodeling industry. According to Harvard University’s Joint Center for Housing Studies, spending on home remodeling dropped 1.7% in the first quarter, to $175.6 billion, compared with the same quarter of 2007. The center projects that remodeling spending will fall to $165.9 billion in the fourth quarter, down 4.8% from a year earlier.

Robert Rader, owner of Monarch Kitchen & Bath in Orlando, Fla., says that since last year, the amount spent by his clients for an average kitchen-cabinet job has fallen 21% to about $30,000. Customers are going with cheaper woods such as oak, instead of cherry or maple, and are scaling down the size of island counters, he says. Other kitchen spending also is being trimmed: Where clients once opted for $9,000 built-in refrigerators such as Sub-Zeros, they’re now choosing $3,000, freestanding Frigidaires. Fancy moldings and trims also are disappearing.”

Homeowners who demand all the trimmings may end up purchasing new properties instead of trying to finance costly improvement projects on their own. Sadly, there are number of foreclosure listings now offering stainless steel appliances.

See Also: 5 Financially Sound Ways to Use Your HELOC

Tags | Heloc, heloc crisis, home equity line of credit, mortgage crisis