Tight lending limits and loss of home equity have homeowners rethinking their future moves - literally. "There's a lot of value in staying put," says Steven Heiteen, owner of Portland Remodel. That's a value homeowners seem to be embracing; the old practice of "moving up" is giving way to improving what exists. And that, as Tom Kelly of Neil Kelly Design/Build Remodel, is music to the remodeling industry's ears.
Earlier this year, economists were cautiously forecasting that the national remodeling industry might see as much as a 3 percent growth by year's end. That might not sound like much, but since its peak in 2007, the industry has been in a battle that has left shuttered firms in its wake and others barely holding on. For those firms still standing, any sign of growth is a big and welcome sign.
In the Portland area, remodel spending, which hit a high of $304 million in 2007, fell to $210 million at the close of 2011, according to Construction Monitor, a building industry data aggregator. But as 2012 headed into summer, some forecasts show an upward trend in homeowners spending money on their houses.
The Leading Indicator of Remodeling Activity recently released by the Remodeling Futures Program at the Joint Center for Housing Studies of Harvard University expects national remodeling activity to pick up later this year, perhaps resulting in 2012 ending with activity up 5.9 percent.
Heiteen says his clients seem to have let go of the notion that every project has to up the resale value of their home. Rather, they are recognizing they like where they are and don't want to spend the money to move.
In April, the National Association of the Remodeling Industry polled its online audience and found 26 percent of respondents said they not only plan on staying in their home, they plan on staying an additional 16 to 20 years, mostly because of home values taking a dive. Twenty-three percent reported they are going to stay an additional six to 10 years in their homes.
Staying put, however, does not translate to staying the same.
Heiteen, who has been in the business for 20 years, says he sees pent-up demand driving homeowners to make more significant changes in their homes. He says the past couple of years were marked with maintenance and energy improvement projects. Now he sees homeowners pulling the trigger on project they want to do as opposed to projects they must do.
A focus on lifestyle
The downturn in home values has certainly affected the way some people are looking at their home, says Melody Emerick of Emerick Architects. She finds her clients are thinking more and more about living in their homes for the next 20 years and how to make their homes fit their lifestyle. Making changes based solely on resale value is not longer the No. 1 concern.
They aren't, however, blowing out walls for giant master suites or huge kitchens; they are remodeling with a laser focus on getting exactly what they want. "They want quality. It doesn't mean fancy, but quality," she says.
Looking back over the past couple of months, Emerick, marking 13 years as an architect, says she thinks people are simply tired of walking on eggshells. Folks are feeling more secure in their jobs and want to take action on their pent-up desires.
Eve Callahan and Scott Taylor lived in their Southeast Portland Brooklyn neighborhood for about seven years when they decided to move. But after looking for nearly a year, they looked at each other and realized they didn't want to leave their neighborhood. So in 2009, when the economy was taking a dive, they decided to invest not only in their home, but in the neighborhood they'd come to love. "That felt good," Callahan says. "We were also paying contractors and others who needed the work."
They hired Emerick Architects, who helped them find the extra square footage they needed by enclosing a portion of the porch and put some of the charm back into their 1910 house. "This is now the house we'll have for the next 10 to 15 years. ... We've got the house we want to live in," Callahan says.
Staying in the same home and wanting that home to work efficiently has kept Neil Kelly's retrofit division humming, says Tom Kelly, who since 1979 has run the Portland-based firm his father began in 1947. Overall, his business is up 20 percent from last year, much of which Kelly attributes to the work they do in home energy performance, a division that began with five employees and now has more than 30.
"Everything's pretty steady," he says. "Bouncing up."
From those he met at a recent industry event in Chicago to his cabinet dealers in Seattle, Kelly says, he's witnessing optimism about the industry forecast.
"The economy is chugging along a little," says Jim Kitchin, president of the Oregon Remodelers Association and owner of InterWorks. He sees folks spending on projects but being cautious, keeping an eye on those things that improve home performance and are proven winners in the cost vs. value realm such as kitchen and bath remodels.
Online remodeling site Houzz released poll figures in May that re-enforce the "stay-put" trend with its tag-along trend of getting comfortable in your existing home.
The polls concluded that of homeowners who plan to remodel or decorate in the next two years, 86 percent said "improving the look and feel of the space" was the force behind their decisions. Only 47 percent cited "increasing home value."
"We expected that in this economy, Americans' highest priority would be increasing home value, but instead we found people are focused on pleasing themselves, not the next owner," said Liza Hausman, vice president of marketing for Houzz. "Homes today are doing double or even triple duty as workplace, staycation, gym and more."
Remodeling used to be about increasing the resale value, says Dean Herriges, National Association of the Remodeling Industry president. With homeowners deciding to stay in their homes, they have sparked a new remodeling trend that now centers on making homes reflect individual lifestyles and tastes.
Sunday, July 22, 2012, 1:46 PM Bridget A. Otto, The Oregonian