Yes, home values are down, and home-equity loans are no longer being handed out like candy at a parade.
But, if you have the money, there may be a silver lining in that kitchen remodeling you’ve been putting off.
Now, contractors are competing fiercely to get work. Some projects are taking half as long to complete, and materials such as tile and granite are cheaper. .
“Right now, everybody’s hurting, and you can get a good deal,” said Moses Pineda, who recently sought several bids on kitchen cabinets and countertops for his Gilbert home. “It’s the perfect time because (remodelers) will negotiate with you, and they will listen to you.”
Area contractors who specialize in remodeling admit their workloads have thinned and subcontractors are more available, which often means better prices and faster service for homeowners.
“If you’ve got the money or the credit, this is the best time to remodel than we’ve seen in many, many years, especially if you’re planning to be in your home awhile,” said Clark Worthley, owner of Case Remodeling in Scottsdale
The number of issued residential-remodeling permits dropped about 16.7 percent in December 2008 vs. December 2007 in Phoenix, Scottsdale, Mesa and Glendale combined, according to the cities’ building-safety and development-services departments.
Two nationwide surveys confirm remodeling has taken a big hit. Harvard University’s Leading Indicator of Remodeling Activity report predicts homeowner improvement spending will decline at an annual rate of 12.1 percent by the third quarter of this year.
The National Association of Home Builders, which releases a quarterly Remodeling Market Index survey, expects residential remodeling to remain slow this year but to show growth in 2010.
“Quite frankly, a lot of people have this belief that when new homes slow down, remodeling picks up,” said Greg Miedema, president of Dakota Builders in Tucson and the NAHB’s remodeling chairman. “That’s not really the case. When people lose confidence and purchasing power, they cut everything.”
Now, one hurdle is that average home-equity-loan rates are up to 8.4 percent nationally, which is the highest since November 2001, according to Bankrate.com. Average home-equity line-of-credit rates are 5.2 percent, according to Bankrate.com’s latest national survey. Chris Kissell, senior editor at Bankrate.com, said both types of loans are more difficult to obtain right now, as banks protect themselves from lending risks.
Nicolas Retsinas, director of Harvard’s Joint Center for Housing Studies, cited homeowner worries about escalating job losses as a main reason they’re reluctant to undertake major projects.
During the most recent housing boom, when local contractors were swamped, projects often came with longer time frames and higher bills.
“It just went bonkers, and the contractors could charge a lot more than they can today,” said Shelley Caniglia, a Realtor with the Caniglia Group in Phoenix.
Contractors say another benefit of remodeling in this economy is not having to live as long with the chaos of a torn-up home. Several local contractors confirmed project times in general are shorter because they have fewer jobs.
“When people aren’t as busy, you’ll get it done a little quicker at a little better price,” said Glen Brennan, owner of Badger Restoration in Phoenix.
“Definitely, our lead times are down,” Worthley said. “Our subcontractors are a lot more available. For an average kitchen remodel, where it probably took close to three months before, it can be done in half that time.”
Miedema said that, although remodeling contractors are not being overly optimistic about work in the coming months, he does think foreclosures and short sales will spark more remodeling work.
“Because you can get real estate at essentially bargain-basement prices, it makes it much more attractive to put money into that home,” he said, adding that at his own Tucson business, “I can tell you that 2009 is starting a lot better than the end of 2008.”
