Late last month some good news came from the government. Sales of existing homes rebounded strongly in January to the highest level in several months. This is extremely welcome news. Long before the Joint Center of Housing Studies introduced its Remodeling Activity Indicator and before the economics department at the NAHB introduced its Remodeling Market Indices for current and future expectations, existing home sales was the only game in town. And it remains a highly-reliable indicator of remodeling activity.
Discretionary spending on remodeling is often triggered by life events, and no life event is more impactful on remodeling than the sale and purchase of a home. Studies show that improvements are made to homes just before they are put on the market and again after the new owners move in. These numbers bolster the prediction that remodeling remains a shining light in the residential construction industry as well as a bright spot in the economy — after all it is a $280 billion industry.
Despite its size and its continued good health, the remodeling playing field remains varied and diverse. Put another way, remodelers come in a lot of flavors. There are the full-service remodeling firms that are set up to do everything from small handyman jobs under $1,000 all the way up to high-ticket, whole-house remodeling projects. There are design/build firms that tend to stick to higher-end jobs. Others specialize in kitchens and baths. Then there is a long list of specialty exterior contractors who do sunrooms, decks, siding and windows. Often left out of the equation are the general contractors who cross over between new construction and remodeling. And then there are companies like CNS Builders of Chicago. In the past three years they have rebuilt and sold $30 million in luxury homes in Chicago and its Northern Suburbs. The care and attention they put into their jobs cannot be classified with the legions of “flippers” who quickly improve properties and get them ready for market.
CNS gutted the 115 year-old home that is featured on this month’s cover and painstakingly rebuilt it better than the original. The investment required was substantial, but these are also disciplined and knowledgeable real estate professionals. Their knowledge of home buyers at the top of the market is extensive, and from that perspective, their risk was less than many other types of speculative remodeling projects we typically encounter. At the end of the day, remodeling is driven by the future expectations of homeowners and homebuyers. What are they willing to invest in the place they want to call home? Based on existing home sales figures, right now Americans are still finding plenty of appetite for finding the right amenities to fit their lifestyle — regardless of whether they are buying a luxury spec remodel or they are staying put and improving what they’ve got.
In the remodeling industry, it takes all kinds.