Sunday, August 18, 2019 1:00 am
Remodelers eyeing 2020
Busy now, but many wary of slump in home sales
LISA GREEN | The Journal Gazette
Randy Shank has been in the remodeling business 20 years and can usually schedule new projects in about 30 days.
But if you call Auburn-based Shank Custom Builders Inc. these days, you're likely to face a wait of 60 to 90 days.
“I'm kind of buried in it right now,” Shank said last week. “For me, my business has taken off. I would hope it's me, and not the economy. I get a lot of referrals.”
Matthew Hilty, owner of MJH Construction in New Haven, is also enjoying a similar demand.
“I'm probably booked out about a good month and a half or two months right now,” Hilty said.
Remodelers are having one of their busiest summers ever, but some industry observers suspect that could change in some areas.
The annual gain in home-improvement spending is expected to fall by as much as half in many major real estate markets by the end of this year, according to the Joint Center for Housing Studies of Harvard University.
That's good news for homeowners with big projects on their lists, but it's putting remodelers, handymen and their subcontractors on edge.
“If you've been in business more than two years you're always worried about what next year will be like,” said John Sylvestre of Sylvestre Remodeling and Design in Richfield, Minnesota. “I'm a little more nervous about what's going to happen next year.”
The biggest worry is slowing home sales, a leading indicator for home-improvement expenditures. Here's why: Homeowners are much more willing to defer big projects than those making a move.
Sylvestre and other contractors say that when people remodel their current homes, they tend to tackle smaller projects and spend less than move-up buyers.
Harvard's Leading Indicator of Remodeling Activity says annual gains in homeowner expenditures for improvements and repairs across the nation are expected to shrink to just 0.4% by the second quarter of 2020. That's compared with 6.3% now.
Ed Roskowinski, owner-general manager of Vujovich Design Build in the St. Paul, Minnesota, area, said the coming election year could lead to a possible slowdown.
“Every four years you see a downtick (in sales) for about four months,” he said.
“A lot of our clients are tied to the stock market, so they're a little uncertain and will sit on their wallets and wait until the election is done.”
Hilty, from MJH Construction, remains optimistic.
“I'd say the economy looks pretty good right now,” he said.
Remodeling is a primary focus, but Hilty said he also helps homebuilders, working on doors, trim, fireplace mantels and custom work.
“I guess what I see right now is a lot of kitchen and bathroom remodels going on,” he said.
Homeowners may not be contemplating putting their home on the market, but upgrades help modernize their space and could make the property more desirable later, said Hilty, whose been in the business about three years.
“In two or three years, if they want to sell it, to build or downsize, it makes their current home more marketable,” he said.
Shank said many homeowners are investing in upgrades because they can't find the type of home they desire on the market.
“At some point it's got to go the other way, but (remodeling demand is) lasting longer than I expected,” Shank said.
His son runs NuVision Properties, also in Auburn. NuVision started about five years ago and focuses on flipping, buying distressed property below market value and renovating for resale.
Some remodeling companies say their biggest challenge now is finding skilled workers and subcontractors.
“Our contractors are constantly telling me they have to turn away jobs because they don't have the labor to do the jobs,” said Beatrice Owen, executive director of the Minnesota chapter of the National Association of the Remodeling Industry. “There just aren't enough employees.”
Shank can relate.
“All the guys we hire (subcontractors) are always looking for more workers. ...It's very tough to find skilled help,” Shank said.
“There's always guys for hire, but it's hard to get them to do what they say they're going to do and get them to do quality work.”
The Star Tribune in Minneapolis (TNS) contributed to this story.