NEW YORK — With credit markets ever so tight, many families are deciding against shopping for new houses and, instead, are remodeling their current homes. But there can be financial pitfalls in remodeling, especially for those taking on major tasks such as room additions or full kitchen makeovers.

For one thing, some families may have as much trouble getting a loan or a line of credit to upgrade a home as they would getting a new mortgage. And as home prices have dropped in many regions, it can be harder for a family to recoup the money it puts into a remodeling project.

As a result, the Joint Center for Housing Studies at Harvard University expects home improvement activity to slow this year, possibly by as much as 5 percent, before picking up again in 2009.

Still, for some families, remodeling can be a good strategy, said Dan Fritschen, author of "Remodel or Move? Make the Right Decision."

Fritschen notes that many projects are triggered by life events — the birth of a child, the departure of the kids to college, a financial windfall. At other times, there are maintenance issues, such as the need to fix a leaking roof or to install energy-efficient windows.

There also are emotional triggers, he adds, saying: "For most people, deciding to remodel isn't an investment decision, it's an emotional decision, because this has to do with something very important to people, which is their home."

One thing that has discouraged some homeowners from tackling major remodeling projects is the concern that they won't be able to recover the cost when they do sell their houses.

In fact, Remodeling Magazine, which monitors the market, has found that the cost of remodeling projects has risen sharply while the money recaptured on the sale of a home has fallen.

Its 2007 survey, for example, found that the addition of a family room cost an average of $79,000 but the owner could recoup less than 70 percent of the investment on resale, down from more than 80 percent four years earlier. Adding a bathroom will cost $37,200, with a payback of about 66 percent, down from 95 percent four years ago, the magazine said.

California remodeler William Carter, who is president-elect of the National Association of the Remodeling Industry, which is headquartered in Des Plaines, Ill., said many of those looking to remodel today are baby boomers whose kids have grown and left home.

"They're at the peak of their careers, with good earnings, and they've got the extra cash that used to be spent for the kids," he said.

Carter believes people are "nesting" more, meaning they're staying close to home.

"If you look at the price of gas and airfare, it could reinforce that trend," he added. "Most in the remodeling industry are having a very good year."