We stand in the depths of a recession, caused by a housing bust and shady bank dealings that have been the downfall for an alarming number of builders and contractors. Slowly, however, the mood is turning less sullen, consumer confidence is gradually returning, and homeowners and builders alike are starting to look to the future as potential salvation peers over the horizon.

In the chaos and hysteria that followed the bubble-burst last fall, there was a good deal of panic and a lot of shoulda-woulda-coulda talk. Well there’s no preventing what has already happened. We can, however, begin to do something about, as well as make absolutely sure that we learn from past mistakes. The building industry has a proven cyclical nature; a nature that many builders failed to recognize during the lucrative boom that preceded the equally destructive fall.

In order to help builders avoid another crash, or at least find a way to weather the next drop (assuming an impending rise), Builder Online has compiled a list of lessons for builders to take away from the current recession. Designed to illustrate some rare recession successes and prepare for a smarter boom the next time around, the six lessons are summarized below:

1. Build Smarter. Think energy efficiency, renewable energy, and smaller, lower maintenance homes. These will be key attributes of the recession-era home for the eco-conscious consumer and a government likewise determined.
2. Limit Land Holdings. Some builders were buying up every site in sight during the boom, many of whom have been left holding their hats. On the next go round builders should be thinking twice about purchasing land before its true value is known.
3. Find New Cash Streams. Banks have folded their arms and zipped their books shut in the wake of mass failures. Therefore credit is rather hard to come by these days, so some builders have been searching outside the banking arena, even overseas, or signing deals to finish projects acquired by lenders via foreclosures.

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A recent Money Magazine article put an apt spin on today’s remodeling market. First the good news, the cost of materials are falling rapidly and bringing down the cost of remodels themselves. This bodes well in that homeowners, who may not be able to sell their house in the present market, can at least get the best price on those much-needed renovations they’ve been putting off. This could mean some work for contractors yet. And a good selling point for convincing on-the-fence homeowners to go for that remodel now rather than later.

But there are two big downsides. One, the pool of contractors looking for work is growing steadily and driving down prices further. Two, that means profit margins are slimmer and contractors who get the go ahead may have to do more work for less money.

But it is work.

While the article in Money Magazine is geared toward homeowners, there are some important lessons for contractors as well. Mainly getting to know the homeowner in today’s market. Even those with the means to put on a new roof or expand the master bedroom are thinking twice about it. For a few reasons:

• the return on investment is at a low point in the current housing market
• the future is incredibly uncertain

Fortunately, however, there are more reasons why homeowners who can, should remodel:

• material costs are falling fast (especially for oil-based products such as vinyl, asphalt)
• smaller, necessary “fix-ups” still need to be done
• increased competition means lower prices, more concessions
• putting money into the home now, while costs are low, will help the home maintain its value

Still, it’s a very touchy game on all sides. Contractors desperately need work, homeowners still need or want upgrades, but the housing market is not finished declining. It is therefore very important that homeowners understand which projects will have the best return on their investment and will likely be meticulous about choosing a project and a contractor, as the Money article itself encourages. (more…)