Confidence building in remodeling industry as Home Show arrives

Cris Keeter said he’s seen tougher times in the home remodeling business.

He remembers how the housing boom of the late 1990s and early 2000s would convert potential customers to home buyers.

Keeter, owner of All States Exteriors, recalls instances in which his company would bid jobs for replacing windows or siding on a home, and the customer would instead opt to buy a new home because they were so easy to get.

“As a remodeler, we’ve made it through the harder time when interest rates were low and housing was going through the charts,” said Keeter, who started the company 21 years ago.

Still, the past few years haven’t been great for those in the remodeling and renovation business.

During the recession and through the slow recovery, home remodeling activity has changed from whole-room remodels to smaller projects, such as just replacing kitchen countertops and backsplashes rather than redoing the whole kitchen.

“After the market crashed, it was pretty tough out there for us and, I think, for a lot of remodelers,” said Michael Gatschet, owner of Heartland Home Improvements, a 13-year-old company.

But on the eve of the Wichita Area Home Builders’ Home Show, which starts Thursday and runs through Sunday, Keeter and Gatschet said they are hopeful that demand for their companies’ services is on the upswing after several years of flat to declining business that started with the recession in December 2007.

And at least one national report on remodeling activity supports their optimism.

Keeter said that in the past three years, remodeling business at his company — which does replacement siding, windows, doors, gutters and roofs — has been flat to slightly declining. Before the recession took hold in Wichita, he said, his company’s remodeling business was increasing annually.

All States’ employment is about 35, which Keeter said “might be down a little bit” from before the recession.

During the downturn All States was aided by its roofing business, which had been brisk because of the number of severe storms that damaged roofs, Keeter said. In fact, the roofing business was strong enough that it boosted the company’s overall, annual growth. “But you can’t build a marketing plan off a hailstorm,” he said.

Keeter also said he didn’t pull back on the amount of money he budgeted for marketing during the downturn.

“It’s a hard thing to do every month, to kind of face that,” he said. “But that’s the last place you want to cut money.”

Heartland’s Gatschet said that while there were some large remodeling jobs during the recession, they were definitely fewer than in the years before the economic downturn.

Mostly, his seven-employee company took on projects that were more like necessities – repairing floors or tiles – than remodels.

“People were doing more projects they had to do, maintenance type things,” he said.

Not all area remodeling companies said they struggled through the downturn, though.

Jeff Hund, owner of All Seasons Construction, said he had strong years in 2010 and 2011. They were strong enough that his company found itself on Qualified Remodeler’s annual Top 500 list for 2011 and 2012. The trade magazine’s list ranks remodelers across the country based in part on audited financial statements.

All Seasons ranked 282nd on the 2011 list — based on 2010 financials — with $3.05 million in remodeling projects, and on the 2012 list it ranked 306th with $2.71 million in projects. But, Hund acknowledged that there was a lot more business seven years ago. “2006 was kind of the boom time around here,” he said.

Hund, who has been in the remodeling business for 37 years, 22 as owner of All Seasons, said that because of the recession and the downturn locally, he expected his company to feel a bigger impact.

“I really expected a lot more because there was a lot of layoffs,” he said.

Hund said that because his company has done work for more than 4,000 clients over two decades, it was helped by repeat business and referrals from those customers.

“So we do have a lot of connections that way,” he said. “I think when things do get tight, people would rather do business with someone they know.”

He also said his company doesn’t turn away jobs, no matter how small.

“Most of them are not huge jobs,” he said. “I think that has helped us a lot.”

Like his peers, Hund is expecting a stronger 2013.

“I think that we should have a good year,” he said. “In fact, we brought on a salesman over the winter.”

Why the optimism?

Hund, Keeter and Gatschet said their confidence for an improved year is rooted in pent-up demand.

Keeter said a combination of a fading memory of recession and people feeling more confident about their jobs will mean more homeowners ready to start larger projects.

He thinks the reinstatement of federal energy efficiency tax credits — up to $200 for replacement windows and $500 for doors — will provide a little bump, too. “I feel positive we are going to have an increase this year,” he said.

Gatschet said his company is busier now than it was at the same time in the past several years. He’s heard the same from other remodelers, and that some of them are starting to take on “bigger ticket” projects.

“Conversely we’re seeing people that the decision to move is really not a factor,” Gatschet said. “They are wanting to stay in their house, fix it up. I’ve heard a lot of that going on.”

Nationally, the remodeling industry should see improvement in 2013, according to the Joint Center for Housing Studies of Harvard University’s Leading Indicator of Remodeling Activity forecast. The January forecast projects remodeling spending of $127 billion in the first quarter of 2013, increasing to $145.5 billion by the third quarter of 2013. That compares with remodeling spending of $114.8 billion in the first quarter of 2012, and $121.6 billion in the second quarter of 2012.

A separate January report from the Joint Center, “The U.S. Housing Stock: Ready for Remodel,” said the remodeling industry should see increased demand in the next 10 years, driven in part by the number of previously foreclosed properties that need renovation and baby boomers who will alter their homes to accommodate their lifestyles as they get older.