Jan. 20, 2010, Las Vegas — Although the remodeling market has certainly suffered during the housing downturn, an uptick in business has begun, as homeowners opt to stay put but still desire improvements, industry experts told reporters during a press conference at the International Builders' Show.

According to Kermit Baker, Ph.D., senior research fellow at Harvard University's Joint Center for Housing Studies, remodeling experienced a peak-to-trough drop of about 30 percent to 35 percent, but the decline was considerably less than new-home construction's peak-to-trough drop of 75 percent.

"We're seeing some signs that it's starting to turn around," Baker said, attributing the change, in part, to increased existing-home sales driven by home-price declines in certain markets. The strongest segment of the market has been replacements, he continued, but that's giving way to more discretionary spending—albeit on a smaller scale than in the recent past. Boosting activity will be green initiatives to improve energy performance, adapting homes for aging-in-place Baby Boomers, and refurbishing foreclosed structures.

"People are nervous about investing, but when they do start to engage I think they're going to look at the remodeling market," said architect Sarah Susanka, author of The Not So Big House.

Susanka, who recently released Not So Big Remodeling, is trying to reinforce to homeowners that living in an efficient dwelling doesn't mean buying a new one and that it typically takes less money to upgrade what you already have than to start from scratch. Like others at the show, Susanka noted an attitude shift toward smaller houses that suit homeowners' continued desire for safety and comfort, as well as their economical need to stay in. "Most likely they don't need to add on, they just need to remodel," she noted. "The home of [their] dreams may be the home [they're] living in now."

Bob Peterson is seeing that "nesting" trend with homeowners in Colorado—a need brought on by 9/11 and recently reinforced by the down economy. As a result, resale value has taken a back seat: "They're settling into a place to live for the long term and aren't as concerned about making money on it in the short term," said the remodeler, president of ABD Design/Build in Fort Collins.

Green building is here to stay, he noted, but the focus in his market is strictly on those upgrades that will make an immediate return, such as high-performance HVAC, windows, and doors.

As with Susanka, many of Peterson's remodels focus on ways to utilize the existing footprint by developing or reassigning unused areas of the home into desired new spaces. For example, a two-story foyer may be converted into a second-story bedroom.

In Issaquah, Wash., longtime SIPs remodeler and builder Donna Shirey, president and CEO of Shirey Contracting, is finding additional success by diversifying into home-energy analysis. People often love their home, she said,, but they don't know what to do to make it more comfortable. Energy testing gets the company's toe in the door, where they're able to provide the homeowner with a menu of options and priority recommendations based on the family's health and safety needs.

Another tool that's helpful to both homeowner and contractor: creating a master plan that allows for completion of the wish list in pieces over time.

And the most sustainable choice? Make it a house that people will want to live in for decades to come. "One of the most sustainable decisions you can make," Susanka said, "is to make it beautiful."

Katy Tomasulo is deputy editor for EcoHome.