Home remodeling on the upswing
BY AP Wire Service
Sunday, October 07, 2012
10/16/12 at 7:41 AM
NEW YORK (AP) - Glenn Bridges can tell that the market for home remodeling is picking up - when he's hanging cabinets or laying a floor in a house, a next-door neighbor is bound to knock on the door and ask if he's available for another project.
They'll look at his handiwork and then say, "we have something we're interested in doing," Bridges said.
The collapse of the housing market decimated business for contractors, most of whom are small businesses with just a few employees. But many are seeing business improve as home sales recover and home- owners who had put off projects during the recession are feeling better about the economy.
Still, the improvement is gradual and projects aren't as lucrative as they were back when homeowners were able to borrow against a large amount of equity in their houses.
Bridges was so optimistic about the remodeling market that in February he restarted the contracting business he shut down in 2007. When he closed, he laid off his three full-time workers. But at the start of 2012, things began to change.
"I had people that needed work done and all in one weekend, they said to me, 'Why don't you help me ... Why don't you get active again?' " said Bridges, owner of Eagle Ridge Contractor Services in Naples, Fla.
He had spent the intervening years working on projects with other business owners.
He's worked steadily since February, installing new kitchens and bathrooms that range from $10,000 to $25,000, depending on the size of the room and the quality of the cabinets and appliances. He hired one full-time worker when he started his business again and says he may take on as many as three more if business is good enough. And he's optimistic that it will be, because he's getting more requests for bids on projects.
"Where I was pricing one or two (projects) a month, I might now price five or six a month," Bridges said. "And I think I'm not unusual ... there's more optimism."
Bridges isn't alone. Sales of previously occupied homes are up more than 9 percent this year, and spending on residential construction has risen 16 percent. People who track housing trends see signs that remodeling is on the rise - and that the improvement will continue.
Harvard University's Leading Indicator of Remodeling Activity suggests that annual homeowner improvement spending could rise 12.2 percent in the first quarter of 2013, up from levels reached in the first three months of 2012.
Some of the uptick is coming from new homeowners fixing up and some is coming from people who put off work during the recession.
"Even though it's a down market, homeowners are always having to do certain projects - roofing, siding, heating systems," said Abbe Will, a research analyst with Harvard's Joint Center for Housing Studies. "When we're moving into a recovery phase, we're going to be looking to the discretionary projects, like kitchen and bath remodeling. We're expecting to see lots more of that as the housing market stabilizes."
Nick Rossi has also seen an improvement in 2012. Prior to this year, homeowners "just wanted to get by with what they had. I was doing a lot of repair work," he said.
When business first began to pick up at his Boston-area company, homeowners were looking for what he calls facelifts - changing cabinet hardware, countertops and flooring in the kitchen, but they were holding off on major renovations. More recently, customers have been digging deeper into their pockets, opting to do a whole remodel of a kitchen or bathroom and some are more willing to splurge on a more expensive countertop or appliance, he says.
But while business is improving, some contractors say spending hasn't returned to levels reached before the housing bubble burst. Hugins Construction in Coral Springs, Fla., is seeing a rise in the number of jobs, but owner Rick Hugins says the market is still far from the boom he enjoyed before the housing collapse.
"There's work out there, but the level of business is much smaller than I've seen it in my career," he says.
"People say, 'We want another bedroom, bathroom or to blow out our kitchen,' " Hugins says. "When they find out it's going to cost $100,000 to $200,000, they go, 'We've got to wait.' "
Original Print Headline: Home remodeling picking up
Carpenter Nick Rossi, of Newton, Mass., a contractor who does home remodeling and renovations, works at a home in Watertown, Mass. STEVEN SENNE / Associated Press