In my neighborhood, the trend a few years ago was to borrow against the bubble-inflated home values and do extensive renovations. Now the trend is to tear down the cheap older homes and build larger houses in their place. But the lots are tiny, and the new houses stretch from setback to setback, so the kids don’t have any yard to play in. It’s sad.
There was doctor in our town that tore down a house on a double size lot that cost him $330K. He then built a nice home on the lot during the bubble. He moved out of state and tried to sell it for $1M. It sat for several years and he finally sold it a couple of years ago for $550K. One of the main problems the guy had, is the house is in neighborhood were most of home values are around $200K and Fannie Mae loan limits are in the low $400K for our area..