Harvard University’s Joint Center for Housing Studies notes that homeowners are redirecting their remodeling dollars away from kitchen and bath remodels, room additions, and interiors. But pros in some areas are still doing a brisk business in two-story additions, often to enlarge a kitchen, add a home office, or build a tricked-out master suite that’s separate from the rest of the family’s bedrooms.

That project is among the most expensive of remodeling undertakings, so contractors are taking care to add value to the home as they add space. Here are 16 tips from pros who are successfully building up and out:

–Use the existing house as inspiration for the addition. Installing a different style of siding, roofing, and windows on the addition will make it obvious that the new rooms were not built as part of the original house.

–Duplicate architectural elements from the main house in both the interior and exterior of the addition—on both floors—to create a sense of unity between old and new. In a home with a bay window and window seat in the existing living room, Ward designed a similar area in the new family room.

–Mismatched windows are a telltale sign that part of the house has been added on. Choose windows in the same style and material—or at least a lookalike material—as the ones on the original structure. Keep the sill lines even on both structures.

–Blend the new flooring with the old. Ward notes that the rich-but-worn look of old hardwood floors is hard to replicate with brand-new material.

–You can also make an addition “match” the rest of the house by remodeling parts of the existing structure so it includes some of the addition’s modern touches. One builder did this to a brick home whose owner wanted board-and-batten shake siding on the two-story addition. He re-sided a pair of dormers on the opposite end of the house, too, so the facade looks balanced and the addition appears to be part of the original structure.

–Likewise, try to replicate the addition’s up-to-date structural, safety, and energy-efficiency improvements in the older part by suggesting that the homeowner bring the whole house—and not just the addition, as required—up to code.

–Incorporate modern materials that look authentic and match the main house but that are engineered to last longer, hold up better to harsh weather, and require less maintenance. Builders are installing high-end, solid-core fiberglass doors and textured fiber-cement siding that looks as much like wood as the years-old material on the rest of the home.

–Convince your clients to upgrade the HVAC. An air-conditioning unit that’s properly sized for the original structure will not perform well if you add more than about 30 square feet to the house. Most clients resist replacing their existing units because of the cost, but that their homes are usually uncomfortably humid later if they don’t—especially if the two-story addition includes an unconditioned garage under new living quarters.

-Consider the “flow” of the house. This is a very big deal. A lot of effort is put into making sure [the layout of the house] still makes sense, once it has an addition, so you don’t have to go to the middle of the living room to get to the new kitchen. Sometimes that means reallocating the space in rooms besides the ones you’re adding on.

–Step the addition forward or back a few feet from the original part to avoid turning the building into a big rectangle. This makes for a profile that’s interesting to look at, rather than one gigantic box. Likewise, making the addition’s roof line a bit lower than the roof on the main house can make it easier to flash.

–Still, the trusses between floors should line up precisely. Otherwise, the floors and ceilings of the addition won’t even out with those of the original structure.

–Plan for a large staircase. If you’re lucky, the home’s existing staircase is located close enough to the two-story addition that a new one isn’t needed. If a new staircase is needed, however, it’s likely to take up more space than you might want to.

–Remove existing walls to create larger rooms. Addition can do more than add rooms; they can transform the small, separate kitchen, dining room, and living room into a single, spacious, open area for cooking, socializing, and watching TV. Vaulted ceilings are popular for additions for the same reason.

–Consider alternative framing members for large spans on two-story additions. Lightweight steel beams are thinner than I-joists or engineered LDL beams and have saved him from exceeding height restrictions. Using thicker framing members can create problems with head clearance at the top of staircases, due to the thicker product raises the elevation of the floor.

–If the addition leaves the backyard too small for a good-size deck, build the deck on the side of the house instead. The majority of people that do additions end up adding a sundeck.

–Educate the homeowner about zoning restrictions. Many clients ask for additions that are larger than local laws allow because they are unaware of regulations restricting them from building too close to the property line or covering too high a percentage of the lot. Some communities have height restrictions for multiple-story additions as well.

—Thanks to Sharon O’Malley of Building Products magazine

The Standard & Poor’s/Case-Shiller index showed Tuesday that prices increased in August from July in 10 of the 20 cities tracked. That marked the fifth straight month that at least half of the cities in the survey showed monthly gains.

The biggest price increases were in Washington, Chicago and Detroit. The greatest declines were in Atlanta and Los Angeles.

The August data provides a “modest glimmer of hope” that some areas may have bottomed out and could be turning around, said David M. Blitzer, chairman of S&P’s index committee. He noted that cities in the Midwest — Chicago, Detroit and Minneapolis — have shown some strength since May.

Still, Robert Shiller, the co-founder of the index and a Yale economics professor, said in an interview on CNBC that overall home prices were “flat” and a recovery in the struggling housing market was not on the horizon.

Over the past 12 months, prices have fallen in all but two cities. Detroit and Washington were the only two cities to show year-over-year gains.

The index, which covers half of all U.S. homes, measures prices compared with those in January 2000 and creates a three-month moving average. The August data are the latest available.

“We certainly believe the bulk of the decline in housing is behind us and indeed, one might even say that ‘housing’ is more likely to improve from here,” said Dan Greenhaus, chief global strategist for BTIG. “But given the overwhelming level of inventory that remains on the market … further price declines seem almost assured to help clear the market.”

Prices are certain to fall again once banks resume millions of foreclosures that have been delayed because of a yearlong government investigation into mortgage lending practices.

Those homes at risk of foreclosure promise “to keep pressure on prices for some time,” said Joshua Shapiro, chief U.S. economist at MFR Inc.

Home prices have stabilized in coastal cities over the past six months, helped by a rush of spring buyers and investors. But this year, home prices in many cities, including Cleveland, Detroit, Las Vegas, Phoenix and Tampa, have reached their lowest points since the housing bust more than four years ago.

Many people are reluctant to purchase a home more than two years after the recession officially ended. Even the lowest mortgage rates in history haven’t been enough to lift sales.

Some can’t qualify for loans or meet higher down payment requirements. Many with good credit and stable jobs are holding off because they fear that home prices will keep falling.

Sales of previously occupied home sales are on pace to match last year’s dismal figures — the worst in 13 years. Sales of new homes fell to a six-month low in August and this year could be the worst since the government began keeping records a half century ago.

Foreclosures and short sales — when a lender accepts less for a home than what is owed on a mortgage — makes up about 30 percent of all home sales last month, up from about 10 percent in past years. The large number of unsold homes and foreclosures are sending prices lower and hurting sales.

By Associated Press

The inventory of new homes for sale recorded another all-time record low (records go back to 1963) at 166,000 homes or a 6.2 months’ supply. The May low breaks the record low established in April, which broke the record in March, which was the lowest since April 1967. The number of new homes for sale that are completed and ready to occupy is at an even lower level of 64,000 or an average of 2 new homes per county.

Median new home prices dropped 3.4% from May 2010 as the share of homes sold over $300,000 continued to fall, which is a likely effect from a larger share of first time home buyers and fewer repeat buyers in the market.

The second half of 2011 new home sales rate should improve slowly as the economy improves, employment grows and prospective home buyers regain confidence in their economic and employment future.

Time savings continues to be a huge trend, so speed cooking functions are in high demand. Likewise, technology that simplifies cooking – from “smart” ovens to induction cooktops – are hot, with the caveat that the technology must be easy to use. At the same time, cooking appliances that offer the ability to create gourmet meals are also in demand as entertaining at home remains a popular trend.

Below are some of the hottest trends in cooking appliances today:

• Technology that enables homeowners to do more with less time, work and clean up is extremely popular right now. That means there’s a growing demand for everything from pre-programmed ovens that simplify cooking to cooktops with easy-clean surfaces.
• For those with a passion for gourmet cooking, commercial style cooking equipment is still hot, with consumers looking for duel fuel ranges and cooking appliances that give them greater control (i.e. going from super high BTUs to ultra low simmer capabilities). From a design standpoint, options run the gamut from the ever-popular stainless steel to warmer, stylish hues to bold primary colors.
• Design flexibility is a key trend in kitchen design today, creating a growing interest in multifunctional products and cooking appliances that offer placement flexibility, such as drawer microwaves, double oven ranges, etc.
• Consumers are more price conscious than in years past, so cooking appliances need to offer real value at every price point.
• Healthy cooking continues to be a hot trend, driving interest in steam ovens and cooktops that offer a healthy grilling option.
• With fewer consumers ready to jump into a full-scale kitchen expansion, there’s a growing interest in maximizing outdoor kitchen spaces, with upscale grills that include a host of bells and whistles.

Thanks to Kitchen & Bath Design News

The BuildFax Remodeling Index for April 2011 shows that remodeling activity for the month was higher than any April since BuildFax started tracking the market in 2004.

The latest BFRI index indicates that residential remodeling activity registered the eighteenth-straight month of year-over-year gains, demonstrating that many Americans are continuing to remodel their current homes, rather than purchasing new homes.

The BFRI is the only source directly reporting residential remodeling activity across the nation with monthly information derived through related building permit activity filed with local building departments across the country.

The April 2011 index rose 15 percent year-over-year—and for the eighteenth straight month—in April to 109.7, the highest April number in the index to date.

That follows year-over-year gains of 17 percent in March, 20 percent in February and 22 percent in January.

“April traditionally sets a baseline for the rest of the year in residential remodeling activity, and April 2011 is the best we’ve seen since the beginning of the index in April 2004,” said Joe Emison, vice president of research and development at BuildFax.  “The BFRI is indexed to start at 100 in April 2004 and here we are seven years later, after significant drops in housing value, and the index is almost 110. That means there were almost 10 percent more residential remodels in April 2011 than in April 2004. Given the relatively pessimistic economic news that we heard about April, including a slowing recovery, this is a nice surprise for the industry.”

In April, all regions posted month-over-month gains, and only the Midwest posted a year-over-year loss. The West was up 16.8 points (18 percent) year-over-year and up 5.3 points (5 percent) month-over-month.  The Midwest was down 16.9 points (19 percent) year-over-year and up 10.7 points (17 percent) month-over-month, recovering slightly from a lower-than-average March. The Northeast was up 3.2 points (5 percent) year-over-year and 9.1 points (14 percent) month-over-month, and the South was up 9.6 points (11 percent) year-over-year and 10 points (12 percent) month-over-month.

Surface prep: It’s very important to get all the grease, grime and dirt build-up off the surfaces before painting. Use a strong cleanser and a scrub brush and go over the surfaces well. If you don’t, the new paint can’t grab on.

De-glossing: A glossy surface doesn’t allow the paint to properly adhere. A light sanding will help give the new paint something to hold on to. If your house was built before 1978 and it hasn’t been painted in a while, please consult a professional. Many paints pre-1978 contain lead and sanding can release dust into the air.

Painting: There are two types of paint: latex and oil base. Installing them in the incorrect order can result in pealing. When oil based paints dry, they have a durable, slick surface. This is one of the reasons they last for so long. If you don’t break down that surface, latex paint will not adhere to it. After prepping, apply a good even coat of oil based primer/sealer. This will give you a fresh start and allow both types of paints to adhere.

Many contractors are still willing to cut their prices to get new business, it could be a good time to get projects done for a lower price.

For remodeling, it’s a buyer’s market, says Paul Zuch, president of Capital Improvements, a remodeling firm in Dallas, and president of the NARI (National Association of the Remodeling Industry).

During the downturn, Mr. Zuch’s company lowered profit margins in order to stay competitive with not only other established remodelers but also home builders who began to dabble in remodeling when demand almost completely dried up for new homes.

In fact, 80% of the 554 home-improvement contractors who participated in a recent Angie’s List survey said they would slash prices to win a bid — with some saying they’d drop their price by as much as 20%. Angie’s List is a website that collects consumer reviews of local contractors.
Dusting Off Ideas

Today, people feel that perhaps the housing market has hit bottom or is getting close to it, and projects they’ve put off are getting another look, says Abbe Will, research assistant at Harvard University’s Joint Center for Housing Studies.

And as the housing market gets on firmer ground, that will also spur more remodeling: Previous research has shown that a large amount of remodeling spending happens when homes are being prepared for sale and right after homes are purchased, Ms. Will says.

But as demand for remodeling increases, expect those contractor discounts to start disappearing.

Remodeling expenditures are forecast to rise at an inflation-adjusted annual average of 3.5% between 2010 and 2015, according to a recent report from Harvard’s Joint Center.

The estimate includes home-improvement spending, but not money spent on home maintenance and repairs. The report predicts a long-term recovery for an industry that experienced a double-digit decline from its peak in 2007.
Beyond the Basics

Most investment in home improvements over the past couple of years has focused on the necessities, Mr. Zuch says. People replaced an air-conditioning unit if it went out, for example, but put off other more discretionary jobs including painting, he says.

That’s beginning to change, though homeowners remain more cautious about overspending than they once were, he says.

“Clients who we were talking to two years ago have called up and said ‘We’re ready to put this back on the front burner and move forward,’” Mr. Zuch says. Some homeowners are now forging ahead with improvements that include kitchen and bath upgrades, he adds.

Homeowners who are taking on more discretionary projects, including whole-house renovations and the creation of outdoor living spaces that include kitchens and entertaining areas, plan on living in their homes for a long period of time, he says.

When the housing market was stronger, people were more likely to move when their home no longer suited their needs, says Angie Hicks, founder of Angie’s List. But these days, many people are improving the homes they’re in so they don’t have to move.

All that said, remodeling demand will vary significantly depending on the market you’re in. Ms. Will says hard-hit areas where many homeowners are underwater on their mortgages, such as Las Vegas and markets in Florida, won’t likely see much of an increase in remodeling for a while.
Prioritize Your Wish List

If you’re thinking of remodeling in the months ahead, start by prioritizing your projects.

“We really encourage consumers to do an inventory of their houses every year,” taking note of the improvements that are needed, Ms. Hicks says.

From there, it’s a good idea to tackle projects in order of importance. For example, “don’t add a deck when you need to replace the water heater,” she says.

Projects that make a home more energy efficient, such as new windows and doors, will likely end up high on the lists of homeowners, Ms. Will says.

If you are planning on selling your home in the foreseeable future, focus on projects that will make a difference to buyers and will bring a good return on investment, Ms. Hicks says.

Upgrades that improve curb appeal, including new doors and landscaping, could help sell your home, she says. It’s also important that everything in the home is in good repair, so fix leaky faucets or replace a furnace that’s at the end of its life before tackling cosmetic improvements, she adds.

Also, keep your home’s features in line with other homes on your block. That will help at resale, when comparable sales in your neighborhood will help set the price of your home. If every home on the block has two bathrooms, adding a third bathroom in your home likely won’t offer a good return on your investment, Ms. Hicks says.

Thanks to AMY HOAK
Write to her at amy.hoak@dowjones.com