The National Association of Home Builders is forecasting a modest but measured improvement in the remodeling and renovation sector, which has been troubled by the same conditions that have inhibited the new home sector.
The NAHB is anticipating nearly a 9% gain in the $280 billion remodeling market, which is nearly equal in spending to that of new residential construction, the group said at its annual convention in Orlando earlier this month.
"The phones are ringing a little bit more," said northwest Louisiana contractor George Moore, who chairs NAHB Remodelers, formerly the Remodelers Council.
They're ringing more often at Joseph Iron's shop in the Puget Sound area, too. Not like they used to, but more than in the years when money seemed to be no object. And the jobs are different, too.
Rather than large-scale, whole-house remodels, Iron Brothers Construction is doing a kitchen here, a bathroom there. So is Paul Sullivan, a remodeler in Newton, Mass., who hasn't done any seven-figure projects in three years. Indeed, handyman services now account for half of Sullivan's revenue.
"The market is no longer driven by upper-end, discretionary projects," economist Kermit Baker, a senior fellow at Harvard University's Joint Center for Housing Studies and director of its Remodeling Futures program, told a media briefing.
According to Baker, the same problems that have hindered a recovery of the overall housing sector also are plaguing remodeling.
For one thing, "people don't remodel if prices are falling," he said, because they are worried they won't recoup the cost when they eventually sell their homes. For another, people aren't moving as often, which is a lost opportunity to make home improvements.
But the Harvard economist sees a bright future ahead for remodeling and single-line contractors, particularly because "the huge block" of distress properties that have yet to come on the market could result in anywhere from $6 billion to $8 billion in revenue as banks seek to make them marketable once again.
Other expected revenue generators include aging-in-place retrofits that allow seniors to remain in their homes and energy efficiency upgrades.
Baker said so-called green projects account for 30% of the dollars spent on remodeling, and a report issued here by McGraw-Hill Construction said 34% of all remodelers expect to be doing mostly green work by 2016.
