Cause for Optimism

Despite a stream of troubling economic news, a surprisingly large number of remodelers surveyed by Qualified Remodeler remain relatively optimistic about business in 2009. Nearly 60 percent expect revenues to be the same or better than 2008. A quarter of those surveyed expect business to be flat, while 18.5 percent expect business to be up 5to10 percent, and 13 percent expect increases of more than that.

Asked what option best describes their 2009 focus, remodelers responded similarly. Nearly two-thirds (64 percent) expect to hold the line on revenue or increase it. Slightly over 10 percent expect to downsize their companies, and another 23 percent describe their business stance as survival mode.

Less than 20 percent surveyed described remodeling activity in their local markets as “vastly declining,” while a slightly smaller number (17 percent) forecast an increase in activity.

That isn’t to say, however, that there aren’t numbers of remodeling firms facing difficult times and wrenching decisions that may include downsizing and laying off valued employees to survive.

Excitement is Back

While acknowledging remodeling activity in the Atlanta area has declined drastically in the last quarter of 2008, Bernie Smith of MasterWorks Design/Build says the economic conditions have brought back the excitement of closing a sale. “Now, closing a sale is just as exciting as it was 10 years ago,” he says.

He notes that competition has grown stiffer. Instead of competing against two or three firms for a job, he’s now competing against 10. “Five of them are builders who are giving extremely low prices. I think they are just trying to stay alive for another few weeks,” he says.

Smith relates that he embarked on a “heavy-duty” marketing campaign when everyone else was putting on the brakes. “We find ourselves spending a lot more to make a lot less. Our margins are down, and our cost of doing business is up,” he says. Nevertheless, Smith is pleased with the results of the marketing push and feels it has given him an advantage.

“Batten the hatches down and be prepared to do whatever you can do to make money” is Smith’s philosophy these days. Adapting to the new economic reality, he’s setting up a division of his company to handle maintenance and handyman work, the sort of essentials he feels homeowners will continue to spend on.

Further, he’s getting set to offer economy kitchen and bathroom remodeling packages with limited options to control costs. That concept may be attractive not only to homeowners who want to upgrade the appearance of their homes at a reduced cost but to the new owners of foreclosed properties who need to upgrade the homes before putting them back on the market.

Yet another option Smith is exploring is buying foreclosed homes in higher end communities — places where Smith has done previous work — and turning them into “green” remodels and giving them a new home warranty.

Canary in the Coal Mine

Doug Walter of Doug Walter Architects in Denver, as a residential architect, perhaps saw the downturn coming sooner than some. “I’m a canary in the coal mine,” he says. “I see work [in the planning stages] months ahead of the contractors.” He notes there wasn’t much work “on the boards” in late 2008, meaning that there won’t be a lot to hit contractors’ desks in the new year.

Nevertheless, he says this is a great time for consumers to remodel, given increased competition and lower interest rates. He’s cautiously optimistic that 2009 will see a modest recovery. “It’s just a question of when people will feel comfortable to start spending on major capital improvements again,” he says.

Gary Collins of Windows and Beyond, a full-service remodeler in Concord, Calif., says the market is as cold and ugly as the weather outside his window when he talked to Qualified Remodeler.