Cover story: Remodelers build on spark of recovery

Drive around the neighborhoods of the greater Washington area and you may literally see more signs of economic recovery. Bright yard signs announcing a new roof, windows or an addition used to be ubiquitous just a few years ago. The signs, along with the remodeling jobs, are few and far between these days.

According to the latest National Association of Home Builders’ (NAHB) Remodeling Market Index (RMI), the residential remodeling market showed signs of improvement during the first quarter of 2009, although the numbers still indicate that the majority of remodelers view market conditions as less than favorable.

“Conditions remain below average and are down slightly from this time last year,” says David Crowe, NAHB chief economist and senior vice president. “The gains over the last quarter and improvement in market expectations suggest a spark to the start of recovery in the remodeling market.”

If you’re trying to sell a home, it may be a good time to make some improvements.

“When you’ve got lots of similar houses for sale,” says Gopal Ahluwalia, NAHB vice president for research, “the one with new siding will be the one that stands out. It’s no guarantee - but curb appeal is definitely a factor, given the state of the housing market.”

Things were certainly better for remodelers during the housing boom, but the remodeling market is actually doing better than the housing market now. According to the National Association of Realtors (NAR), the overall housing market declined 7 percent in the past year while the home-remodeling market dipped just 3.86 percent between 2007 and 2008.

Meanwhile, Remodeling magazine’s 2008 “Cost vs. Value Report,” produced in conjunction with NAR, found that homeowners can recoup value from their home-improvement investments. The report estimates the percentage of investment homeowners can expect to recoup for a variety of different projects, from using fiber cement siding (86.7 percent) to adding a home office (54.6 percent).

On average, homeowners can expect to recoup a little more than 67 percent of their investment. That’s down from recouping an average of nearly 87 percent of the investment during the height of the housing boom, but it is still an indication that an improved home is better than one with no improvements at all.

Still, experts caution that any home improvement should be done with an eye toward improving lifestyle - not necessarily for improving market value.

“These days, home improvement as investment is a secondary factor,” says Walter Molony, an NAR spokesperson. “Most are lifestyle improvements.”

Josh Rosenthal of Rosenthal Homes in Potomac agrees.

“People are more focused on basic living spaces these days,” says Mr. Rosenthal. “They’re looking to improve bedrooms, baths, kitchens and family rooms. They’re not really as interested in the home theaters and ‘fun spaces’ that they were a few years ago.”

In other words, create the home you want to live in, not the one you expect to sell for the most profit. Remodeling contractors have less to do these days, so they may be more than willing to bargain or take on a project they would have been reluctant to accept in 2005.

“Our job size has decreased,” says Chris Landis of Landis Construction Corp. and Landis Group Architects, a Takoma Park-based design-and-build firm formed in 1990. “We’ve gone from an average $225,000 job to about $150,000.”

With homeowners spending less and having a harder time getting financing, many remodeling companies looking to remain in business are accepting small projects or adding handyman divisions that focus on jobs like fixing faucets, recaulking tubs and showers, adjusting hinges and changing windows.

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