Published January 2003

Area remodelers benefit from low loan rates

By Kimberly Hilden
SCBJ Assistant Editor

Nationally, 2002 was a banner year for the home remodeling industry. Locally, however, the industry was a mixed bag, area contractors reported.

According to numbers provided by the U.S. Census Bureau, the National Association of Home Builders reported that total U.S. remodeling expenditures for 2002 are projected to hit close to $169 billion, exceeding 2001’s record high of $159 billion.

This despite slowing in the third quarter, which saw the Remodeling Market Index for current market conditions slip three points to a 49.8 rating (an RMI score over 50 indicates that more remodelers view market conditions as favorable than unfavorable).

“Compared to last fall, business is holding up very well,” Bill Owens, chairman of the NAHB Remodelers Council, said in a prepared statement, noting that the third quarter of 2001 had an RMI rating of 42.

“Low interest rates and the strength in the new housing market as well as strong sales of existing homes are positive signs that homeowners will continue to view remodeling as a sound investment from both a financial and lifestyle perspective,” Owens said.

Low interest rates also have helped the Snohomish County residential remodeling industry through a slow economy in which the unemployment rate has been above 7 percent for most of the year, area contractors said.

“We’re kind of in an unusual situation here, with unemployment high and interest rates being low,” said Tom Owen, owner of Creative Kitchen & Bath of Lynnwood.

Owen’s business, which experienced a tremendous slowdown from November 2001 through February 2002, picked up as the year went on, he said. Through November 2002, business was down only about 6 percent from the same time in 2001.

“It’s hard for us to tell whether that (slowdown) was associated with 9/11 events or the economic situation and uncertainty nationally, or specific economic problems in the Puget Sound area,” Owen said. “We had several potential customers who were with Boeing, and Boeing layoffs hurt us.”

But with interest rates near historic lows, Owen picked up other business from homeowners who refinanced and used “the cash from that to put into their home to make it more livable,” he said.

“The fact that rates have been low has been a mitigating factor for us,” he said, adding that repeat customers and referrals, which make up about 70 percent of his business, have helped as well.

Patti Riley of Riley Construction & Home Improvements of Snohomish said her family’s company, which enjoyed brisk business in 2002, also benefited from low interest rates, with people taking advantage of them to build custom homes.

But she said the residential contractor benefited even more from its 30-year presence in the area — and the repeat business and referrals that brings.

“2002 was better than 2001, and 2003 is looking to be better than those,” she said, with a number of jobs already secured for the new year.

Charles Dionne, owner of Dionne Construction of Marysville, also expects better things in the year ahead.

The residential remodeler and customer home builder reported that while business was slow in 2002, revenues did increase by 9.7 percent, and he expects revenues to increase even more — by some 15 to 20 percent — in 2003.

“I know it’s going to pick up in the next year,” he said. “I’ve seen it; it’s just now starting to come in.”

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