The housing slump and credit crunch have taken a toll on the home-improvement market, and some Miami Valley residents are forgoing renovation projects because of a lack of funds or an inability to obtain financing or sell their homes.

The number of permits issued for residential remodeling, alteration or addition projects declined last year in a variety of cities and counties across the region, according to data and building records obtained by the Dayton Daily News. Some home-improvement businesses have also seen their earnings fall.

Industry experts said the declines are likely attributable to persistently high unemployment, tight family budgets, stricter underwriting requirements for bank loans, shrinking home equity and the weak housing market.

“Housing values have dropped pretty dramatically, so you have to question the value of putting a fair amount of money into your home if it’s not going to be reflected in a higher value or a higher sale price,” said Vincent Squillace, executive vice president of the Ohio Home Builders Association. “The economics just don’t work in favor of remodeling like it once did.”

Residential building permits or permits issued for remodeling, alteration and addition projects fell last year in Butler, Champaign, Miami, Montgomery and Warren counties. They fell also in the cities of Beavercreek, Moraine, Riverside and Vandalia.

In all seven counties in the region, home-improvement permits are down compared to before the housing market crashed. But in some counties, the numbers have rebounded compared to the height of the housing slump.

Dayton and Huber Heights, however, reported that residential improvement permits are up, and the number of permits issued by cities have bounced around in the last seven years. Greene County saw permits for residential alterations more than double last year to 286 from 141 in 2010, but they had declined steeply, from 256 in 2009 and 340 in 2008.

Declining home values mean consumers are having more difficulty acquiring home equity loans because they often owe more on their properties than they are worth, Squillace said.

Family budgets, he said, are stretched thin, meaning that many home-improvement projects today are performed out of necessity instead of lifestyle changes, such as wanting a den or a new master bedroom.

“The remodelers have seen the slowdown just as the builders have,” he said.

Widespread foreclosure activity, bankruptcies and credit card debt means consumers have lower credit ratings and banks have adopted higher underwriting requirements, said Peter Price, president of the Miami Valley Chapter of the National Association of the Remodeling Industry.

This makes it difficult to secure financing for major improvement projects.

Consumers are also deferring major financial decisions, such as sinking money into their homes, until there is less economic uncertainty, Price said.

He said “big-ticket” remodeling projects today are typically along the lines of furnace replacements. Like Squillace, he said much fewer people are adding rooms and making major changes to their living spaces.

Some consumers are buying new electronics and appliances to improve their living conditions. Others are performing more basic work that does not require permits, but the economy has also impacted sales at home-improvement retailers

Lowe’s watched earnings fall 44 percent in the 3rd quarter, and the company announced plans to close a number of under-performing stores. Home Depot, however, saw profits rise 12 percent in the 3rd quarter of 2011. Analysts said the company benefited from Hurricane Irene preparation and cleanup.

Menards, the nation’s third largest home-improvement retailer, is building a $9 million Miami Twp. store that is expected to open this fall, the company said.

Still, spending on remodeling is expected to dip in the next two quarters, according to projections reported by the National Association of the Remodeling Industry. The association cited estimates by the Joint Center for Housing Studies of Harvard University’s Leading Indicator of Remodeling Activity.

“Absent a more sustained upturn in the broader housing market, particularly in the sales of existing homes, there’s not much to propel growth in home improvement spending,” Kermit Baker, director of the Remodeling Futures Program at the Joint Center, said in a release on the association’s website. “Homeowners are continuing to undertake smaller jobs but are still nervous about larger discretionary projects

Consumers no longer view remodeling or adding onto their homes as great investments, like they did when property values were appreciating,” Price said.

He said some consumers are not spending money on their homes because they have no intention to put them on the market and try to upgrade to better ones. Still, Price said the real value of home improvement projects is the benefit it adds to the owners’ quality of life. Additionally, low interest rates make it a good time to borrow money for improvements if consumers can afford the loans.

Ceir Coral, 43, of Beavercreek, said he decided to spend about $20,000 to convert his patio into an outdoor living space and remodel his basement because putting his home up for sale was not an option. When the housing market sank, Coral said he was upside-down on his mortgage by about $50,000. He said he decided it does not make sense to sell his home for a loss, so he is staying put and improving it.

“If moving is not in the cards, then you have just got to put some money into your home and make it your own and improve your quality of life,” he said.

Contact this reporter at (937) 225-0749 or cfrolik@DaytonDailyNews.com.