Remodelers may find a sunny side to slump

by Jonathan Nelson, The Oregonian

Joanne Maxwell, an event planner and senior executive assistant to Tektronix’s marketing vice president, spent the past two years contemplating a major remodel to her 1990s-era home. As stock market volatility hit a fever pitch and companies locally and across the country started shedding jobs, the Tigard resident was firming up plans to add 10 feet to the ground floor of her two-story house.

In January, contractors went to work on her new kitchen and family room. “Absolutely I had some reservations,” Maxwell said.

But the recession-driven decline in construction costs became an advantage to Maxwell. The new kitchen and family room will cost $100,000. A year ago, bids for the work came in at $200,000.

The shifting market conditions appear to be enticing homeowners in the Portland area to take a second look at remodeling projects, giving local remodeling companies hope that 2009 might not be as bad as they’d thought.

“Many of us think, while 2009 is a year to (just) hang on, … it’s going to be steady,” said Mitch Stanley, chairman of the Home Builders Association of Metropolitan Portland’s Remodelers Council.

Nationally, the outlook is bleak. Harvard University’s Joint Center for Housing Studies predicts home improvement spending will have declined 12.1 percent annually by this fall. The center’s study found that spending has dropped steadily since 2007, but noted signs that the trend line could be flattening out.

“While we may be nearing the bottom of the remodeling cycle, there is little to push spending back into a growth phase until the economy recovers,” wrote Kermit Baker, director of the Harvard center’s Remodeling Futures Program .

Stanley, owner of Stanley Home Renovation and Design Inc. in Oregon City, said business in 2008 was healthy until last fall, when the financial market started to crumble. Projects in the planning stages were shelved and customers stopped calling.

But Stanley said his business and others started getting calls in early January from people ready to start a project or who at least were asking questions about work. Stanley said the early trend appears to be for homeowners to take on more modest projects.

“Rather than the $100,000 dream kitchen, it’s being scaled back to $75,000,” he said.

The flip side of that is the customer’s dollar is going further. Stanley said the economy has driven down costs for supplies and labor.

Lane Cooper, a 19-year veteran in the remodeling business, said his sales leads remain steady, but he’s uncertain how many of those contacts will materialize into jobs. He projects revenue for his business could be down 10 percent to 20 percent this year.

Cooper’s business, COOPER Designbuilders in Portland, specializes in custom remodeling projects that typically cost $200,000 to $500,000. He said clients, who have seen their investments and home values diminish, aren’t going into projects with open checkbooks. That means Cooper is spending more time at the beginning of a project fine-tuning cost estimates.

Steve Stolze, of SLS Custom Homes Inc. in Tualatin, is optimistic that revenue this year will match 2008’s based on the fact that he has four jobs under way, including Maxwell’s. Steady work for Stolze means he’s continuously working four to six jobs.

Maxwell chose Stolze based on a friend’s recommendation and the work of Stolze’s crew. The expansion of her 2,220-square-foot home to 2,560 square feet means she’ll get a walk-in pantry and kitchen island among other improvements.

“People can sit and eat while I’m preparing things,” Maxwell said. “I’m so excited about that.”

Tips for remodelers
• Keep marketing.
• Stay in touch with past clients.
• Target neighborhoods where you’ve done work, talk to friends and hit the trade shows.

Tips for customers
• Get at least three bids.
• Ask for references and contact them.
• Visit a current job site if possible.
• Make sure the contractor is licensed and bonded.
• Check potential remodelers for credentials and membership in professional organizations. Two good resources: Remodelers Council Web site, homebuildersportland.org; and the Oregon Remodelers Association Web site, oregonremodelers.com.

Source: Mitch Stanley, chairman of the Home Builders Association of Metropolitan Portland’s Remodelers Council

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