Home-remodeling activity declines

NEW YORK - Contractors are bending over backward - even for small jobs like bathroom renovations and cabinetry - as the housing slump infects the remodeling industry and gives homeowners the upper hand in price negotiations.

While not taking the hit that the for-sale market is, home remodeling has slowed as pessimism about home values sets in. Activity remained sluggish in the second quarter, according to an industry index from the National Association of Home Builders, and expectations for future activity were nearly flat.

Total money spent on home improvements and maintenance is expected to dip this year by more than 4 percent to $216.3 billion from $226.4 billion in 2007, the association estimates. The group doesn't expect spending to reach 2007 levels again until 2010.

The pain is most acute in markets where home values are sliding.

"There are some weeks that are good, but there are more weeks when I think my phone is disconnected," said Greg Miedema, president of Dakota Builders in Tucson. "All in all, our calls are definitely down."

He estimates that home remodeling activity is off by 10 percent or more in his area. Homeowners are shopping around more, taking longer to decide and scaling back.

"Instead of a bathroom remodel, a homeowner will just do a new vanity and countertops," Miedema said.

In the greater Chicago area, Michael Menn's business is holding up because he caters to high-end clients who "still have money to spend," said the principal of Design Construction Concepts Ltd. But his remodeling buddies who work on midpriced projects are reporting a severe slowdown.

The industry's recovery is expected to be slow, and it depends on three factors: a stable economy, looser lending standards by banks and easing up of product prices. Higher commodity prices from oil to copper have increased costs of materials such as wiring, plastic pipes and roof tiles.

A recovery in the housing market is also key to bolstering the remodeling industry.

Remodelers are tightening their wallets and courting business they wouldn't otherwise to survive the slowdown. This is good news for homeowners who want to make renovations, Hanbury pointed out, because they have more bargaining power and more qualified remodelers to choose from.

Miedema is taking calls he wouldn't have taken a few years ago including smaller jobs, those homeowners who seem less committal, and those a bit out of the way.

"Frankly, I've got the time now," he said.

Contractors are bending over backward - even for small jobs like bathroom renovations and cabinetry - as the housing slump infects the remodeling industry and gives homeowners the upper hand in price negotiations.