Remodeler Alan Hanbury thinks somebody must have disconnected the phone in his Newington, Conn., office and not told him. After a record year for his company, House of Hanbury Builders Inc., in 2007, he says clients are not calling at all this year. "My client base is doing nothing, not even getting prices. In 30 years in the business I've never seen it like this," he said here last week at the International Builders Show.
But most of the way across the country, in Farmington, N.M., Lonny Rutherford, of Legacy Construction Inc., says his area of the Southwest could use more remodeling contractors to keep up with all the business. "People are still putting money into their homes. They might hesitate a little, but they are still signing contracts," he said. And in the Seattle area, remodeling is holding steady. "It does take longer for a client to sign a contract and do the work, particularly on a large project," said Sherry Schwab, with HCS Construction Services in Bellevue, Wash. "People are asking are we going into recession, should we keep our cash on hand. But we're still getting calls and we're still doing large complete house remodeling as well as smaller kitchen and bath projects." Much like the split personality the overall housing market displays these days, remodeling activity varies by geography and income. "There is more weakness in the upper end of the market, the high-end kitchens and baths and room additions," said Kermit Baker, director of the Remodeling Futures Program at the Joint Center for Housing Studies, Harvard University. "Moderately priced projects ... there is more emphasis there." Nationally, remodeling expenditures are expected to show a slight increase in 2007, edging up to $230 billion from $228.2 billion in 2006, according to Gopal Ahluwalia, staff vice president of research for the National Association of Home Builders. But he expects little growth in remodeling in 2008, although the long-term outlook is still for growth of about 5% per year, in line with increases seen from 1996 to 2006. "The housing contraction has had an impact on remodeling and so we should expect a slowdown in remodeling," Ahluwalia said. "But the growth in the remodeling market has been pretty strong over the last 10 years." Baker said homeowners have less incentive to remodel when home prices are softening, and that is happening in more than half the 150 metropolitan areas surveyed by the National Association of Realtors. "In the short term, people are just nervous about investing in a down market," he said. It is also getting more difficult to recoup the cost of upgrades when you sell: Owners are seeing a payback of only 70% of a project's cost at sale versus 80% a year ago, according to Remodeling magazine's and the NAR's Cost vs. Value study. Homeowners are also extracting less equity from their houses when they refinance and are having a tougher time qualifying for home-equity loans, "cutting into a popular source of financing for home improvement," Baker said. Still, NAHB surveys show 60% of homeowners pay for their remodeling projects with cash. Outdoor projects popular One of the reasons New Mexico may be experiencing such a good remodeling climate is its other climate: With outdoor amenities becoming one of the fastest growing areas of the business, places where patios, decks, outdoor kitchens and fireplaces have more than seasonal use may be seeing more activity. "Three projects I'm working on right now are outdoor decks and kitchen projects," Rutherford said. "But when you get 300 days of sunshine a year, it's hard to stay inside." Forty-four percent of remodeling contractors surveyed by the NAHB said their outdoor-project business has increased somewhat or increased significantly over the last five years. Decks are by far the most popular improvement, but 13% of those projects included outdoor kitchens and 10% added outdoor fireplaces. Even 3% included wine or beer coolers. "These kitchens have no walls, but they do have a roof and all the features an indoor kitchen would have -- range, refrigerator, etc.," Ahluwalia said. For homeowners in areas like Hanbury works in, this could actually be a good time to get the ball rolling on improvements or additions. "Backlogs are light, you'll get better scheduling and possibly some price breaks," Hanbury said. "If you wait until May, you may find yourself at the end of the line."
Comments(0)