Remodeling projects pick up steam
Published: Sunday, April 7, 2013 at 4:15 a.m.
Last Modified: Sunday, April 7, 2013 at 8:39 a.m.
Scott McIntosh represents what for five years has been a rare commodity in Sonoma County: a general contractor who is hiring.
The home remodeling business is “much better” these days, said McIntosh, who owns McIntosh Builders, a 25-year-old Santa Rosa construction firm, with his father, Dave.
“We've never had more work than we have now on the books,” said McIntosh.
Even as new home construction remains far below historic levels, some builders and retailers say that more homeowners have started to fix up their bathrooms and kitchens and to add extra rooms.
Among those reporting an increase is Santa Rosa's Mead Clark Lumber. Its sales of doors and windows — items that normally signal a major remodeling project — increased 10 percent last year. For the first quarter of 2013, door and window sales jumped 35 percent, compared to last year.
“We're definitely seeing increased activity in the last six months,” said Randy Destruel, an owner.
Even so, business remains a long ways from what it was in 2005, when the store rang up $110 million in sales, Destruel said. In the depths of the ensuing downturn, annual sales fell as low as $34 million about three years ago.
Construction has long been a key segment of the county's economy and one that has struggled mightily in the aftermath of a historic housing bubble.
This year the commercial building sector is benefitting from several major projects under way, including the new Sutter hospital in Santa Rosa, the casino resort in Rohnert Park and the Target shopping center in Petaluma.
Even so, construction companies have been slow to hire back workers who lost their jobs during the recession. They employed 8,300 workers in February, up 1 percent from a year ago but still down nearly 40 percent from 2007, when there were 13,700 construction workers in the county.
“There is no rebound on the immediate horizon,” said Keith Woods, chief executive officer at the North Coast Builders Exchange, a Santa Rosa trade group. “But people in this industry do feel that things are getting better, and definitely are better than they were two to three years ago.”
Woods predicted that “2013 is going to look like 2012 and 2011,” but construction activity could increase the following year.
The nation's remodeling sector, meanwhile, has offered some signals that things are looking a little brighter.
An industry index of remodeling activity across the U.S. reached its highest level in more than eight years during the fourth quarter of 2012, the National Association of Home Builders reported.
Spending on remodeling projects across the U.S. is expected to jump 20 percent to $145.5 billion in the 12-month period ending next Sept. 30, according to a forecast by Harvard University's Joint Center for Housing Studies.
Lowe's, the nation's second-largest home improvement retailer, plans to hire 9,000 permanent part-time workers this year for its 1,750 stores in preparation for an expected increase in remodeling projects, according to Bloomberg News.
Friedman's Home Improvement, Sonoma County's largest locally-owned home improvement chain, did not return calls seeking comment.
Some of the activity is driven by buyers remodeling foreclosure properties that slipped into disrepair, according to Harvard researchers. And some reflects a growing sense of confidence among homeowners about their financial future as housing values inch up. The median price for a home in Sonoma County climbed back to $380,000 in March, up from a low of $325,000 in 2011 but still just a fraction of its 2005 peak, at $595,000.
“It definitely feels like it's starting to get better,” said Bill Johnson, president of the North Bay chapter of the National Association of the Remodeling Industry.
The group has also predicted an increase in business this year. But Johnson, vice president of Design/Build Specialists, a Novato firm that works in Sonoma and Marin, noted that work remains scarce and projects draw plenty of bidders.
“I can tell you the competition is still fierce,” he said. “There are a lot of good contractors going for the same job still.”
Garrett's Hardware, with stores in Windsor and Healdsburg, also reported an increase in home improvement sales.
“We're better than we were last year and last year was better than the year before,” said Galen Butts, who manages the two stores.
Several contractors reported they have yet to acquire significantly more remodeling work. Some, however, are hearing more from potential clients.
“I'm getting more inquiries than I was a year ago, and that leads to jobs,” said Joe Callinan, a Rohnert Park city councilman and the owner of Joseph T. Callinan Construction in Rohnert Park.
Alan Medina, owner of Parson's Lumber and Hardware in Boyes Hot Springs, said he has yet to see a rise in business.
“We'll go through little spurts where it looks like it's improving and then it will slip back down,” said Medina, who has owned the store for 24 years.
His full- and part-time staff has declined from 15 in 2007 to nine today. He hopes that business will turn around this year, but regardless “we'll figure out a way to make this work.”
While a jump in home remodeling will benefit retailers and contractors, the major economic impact of residential construction historically has come from the new home sector. Builders said the segment remains sluggish.
The county and its cities issued just 503 permits for new homes last year, according to the California Homebuilding Foundation. By comparison, builders erected more than 2,100 homes a year, on average, over the last quarter-century.
In the past five years, county builders have taken out a total of just 2,600 permits.
Ed Waller, an owner of Shook & Waller, a major home framing company in Windsor, said new home builders remain hobbled because a large number of bank-owned foreclosures and other distressed properties are still available for sale.
“It's going to be quite a while before we can come close to matching those prices with new construction,” Waller said.
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