Houzz News: Remodeling Heats Up

Home professionals note different trends in remodeling across the country

"Two years ago, two-thirds of my work was new construction and a third was renovation projects. In the last two years, that has completely flipped," says Charlie Simmons of Charlie & Co. Design, Minneapolis. "It's hard to sell a home — instead of potentially taking a loss to sell their house, people are modifying their existing home to make the most out of what they have."

Sven Gustafson, a custom home builder and owner of Stonewood LLC in Minneapolis, Minnesota says that while his new construction business hasn't decreased, the remodeling side of his business has increased to about the same level as the new construction side.

Ed Dion of Dion Builders in Tallahassee, Florida has observed something quite different in his home state. "I haven't noticed an increase in remodeling," he says. "More of a decrease in construction overall with remodeling faring better than new home construction — so contractors who normally build new homes are now renovating."

Some projects reflect an aging population

A large amount of these remodeling projects are done with aging in mind. According to the NAHB, about 62 percent of builders surveyed in 2010 were working on home modification projects due to aging. "We aging baby boomers are spending money to make our homes more accessible," says Ed Dion. "Everything from grab bars over the tub, to retrofitting homes to fit an elevator somewhere." Many builders expect boomers to dictate the market as the population continues to age.

Young families will eventually dictate the market

However, Thad Siemasko and Jean Verbridge of Siemasko + Verbridge architects in Massachusetts think young people will grab hold of the market eventually and start focusing on family-friendly housing in a mid-century style. This architecture firm is also seeing a change in style in their renovation projects. Owners are starting to look more towards clean and more modern designs, and want customized spaces with quality materials.

A change in demand creates a change in supply

For many builders, it's meant a shift in goals. For others, it's meant keeping an eye on the competition. "The trend shift is a bit scary," says Nathan Cross of NWC Construction in Florida. "Most builders are capable of building something new, very few are capable of doing renovation work. Sometimes that means the market is flooded with inexperienced people. Homeowners should make sure to hire a professional remodeler — one that can give you references and show you projects."

Dave Nielsen, CEO of Portland Oregon's HBA and the Professional Remodeler's Organization spoke with some of the group's 200 members to get their input, and many had concerns about new builders getting into the remodeling market. It's an entirely different field. New builders often price by square footage, which doesn't work in remodeling. As a result, prices are quoted far too low, and sometimes they'll find out they can't complete the job at that cost. This also means that professional remodelers have to work even harder and lower their margins substantially in to compete.

There's often confusion on what kind of professional to hire when remodeling. Portland's HBA PROs often clarify this difference with their clients: Builders create a product, and remodelers provide a service. However, there are also many full-service companies that can do whatever a client needs.

Remodeling helps homes sell

For homeowners looking to sell, the fact that buyers are willing to remodel in the future doesn't mean you can leave your house in fixer-upper condition. Most builders say the market is looking for houses in great condition. "In many instances, buyers have many homes to choose from," says Dave Spetrino. "They're naturally going to gravitate toward homes that need less work or have the move-right-in feeling. Updating your home before you list it for sale will definitely increase the number of prospects."

The consensus is that people are looking to have a home that they'll stay in for quite some time. Bob Peterson, the NAHB Remodelers Chair, says that he's heard less about resale among homeowners in the last six months than at any other time during his career. "People are staying home," he says. "They want a place to make their own."

Projects focus on quality and sustainability

"We anticipate that the trend in the next several years will focus on value remodeling. Those projects will add value to a home, while at the same time providing greater livability and a fresh sense of style," says Douglas Dick, AIA, of LDa Architecture and Interiors in Cambridge, Mass. "Sustainability will continue to be an important part of any remodel as homeowners work to lower their energy costs while making a real effort to live in an earth-friendly manner."

Remodeling to rise through 2012

As existing houses on the market continue to age and the availability of land continues to decrease, odds are that the amount of remodels will continue to go up. "Our latest release of our Leading Indicator of Remodeling Activity suggests the year will start out slow, but gain momentum by the second half of the year," says Abbe H. Will, a Research Analyst at the Joint Center for Housing Studies at Harvard University. "Continued improvements in the job market and housing market should make homeowners more confident about investing in their homes and undertaking some of those bigger discretionary projects that they put off during the downturn."

"The long and short of it is, I think people are figuring out that the economy is what it is," says Mike Davis of TMT Home Remodelers in Central Oregon and chair of the State Remodelers Committee. "Even though we aren't seeing a very serious uptick in the economy, we aren't seeing it fall any further either. That essence of predictability serves well for the consuming public as they have some idea of what's going to happen tomorrow."

Tell us: Are you remodeling this year?

More:
10 Ways to Expand Your Home Up and Out
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Micro-Additions: When You Just Want a Little More Room
Staying Put: Improving the Home You Have
Cautious Optimism Among Home Builders