As the housing slump continues to affect the remodeling industry, contractors find ways to work, even for small jobs like bathroom renovations and cabinetry.  The remodeling industry hasn’t taken the huge hit as the for-sale market has, but it is feeling the effects, and according to the National Association of Home Builders, it is expected that future activity will go flat.

The NAHB estimates that home improvements and maintenance dollars will dip this year by more than 4% to $216.3 billion, from $226.4 billion in 2007; spending is not expected to reach the 2007 levels again until 2010. Greg Miedema, president of Dakota Builders in Tucson, AZ, states, “There are some weeks that are good, but there are more weeks when I think my phone is disconnected. Instead of a bathroom remodel, a homeowner will just do a new vanity and countertops.”

In the greater Chicago area, Michael Menn’s business is hanging on because he caters to high-end clients as they still have money to spend. This is not necessarily true for remodeling contractors who cater to mid-priced projects. The reason is homeowners are renegotiating their spending decisions, from renovations to smaller projects, or even putting things on the back burner.

The industry is definitely expected to recover, although it may be slow in coming, and depends on three factors: a stable economy, looser lending standards by banks, and easing up of product prices.  The higher commodity prices from oil to copper have increased in costs, but these are showing some decrease signs of recovery.

Of course a recovery in the housing market is the key to bolstering up the remodeling industry, but the slump is also introducing new competition as smaller homebuilders diversify their businesses. Snapping up larger remodeling projects like additions, recreation rooms, and porches can run as high as $400,000 and can easily boost a business during these times. Yes, remodelers are tightening their wallets and courting business not normally considered otherwise. This can be good business for the contractor as well as the homeowner who wants to make renovations. Taking calls for smaller jobs, out-of-the-way jobs, jobs from homeowners who may seem less committed, or even jobs that may have been declined in the past, could be the ticket to survive the slowdown.

Certainly, the homeowner has the upper hand at this time in choosing the best contractor for whatever job they need done, so taking advantage of this could keep a contractor a float until the slump passes.

This entry was posted on Friday, October 17th, 2008 at 12:17 pm and is filed under Industry News. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.