November 11, 2008
November 11, 2008
By Phil Peach,
Oregon Remodelers Association,
There is still a lot of uncertainty about the future of the construction industry, and whether we are at the “bottom” of the economic downturn, how long the recovery will take, when new homebuilding will return and what effect that will have on the remodeling business.
Prospective remodeling customers are paying the price for the breakdown of the mortgage industry, in the form of tighter credit than ever. You have to have a pretty strong credit rating right now, or a lot of assets, in order to borrow funds to do a remodel. We are seeing more and more homeowners postponing their projects, downsizing them, or dividing them into smaller phases, a little at a time.
The serious downturn in new home construction was partly due to overbuilding by high-volume companies competing with each other. Many of those companies have now filed for bankruptcy protection. Vendors, suppliers and manufacturers who depend on both new construction and remodeling are seeing the effects, cutting back on staffing and marketing. However, home remodeling remains surprisingly strong, despite all the gloom and doom in the press.
Consumers are finding that now is a better time than ever to remodel. Last year’s annual Cost vs. Value Study by Remodeling Magazine showed a higher return on remodeling projects than the rest of the country. A typical mid-priced kitchen or bathroom remodel showed a return of about 78.1% nationally, but the figure jumps to over 96% locally.
Building permits for remodeling now exceed the number of permits for single-family new homes in Multnomah County. A recent Census Bureau report shows that Oregonians have enjoyed one of the highest appreciation rates in home values in the country during the past 15 years (254%), second only to Washington D.C.
While membership in local homebuilders associations are decreasing dramatically, Oregon Remodelers Association is experiencing a dramatic increase in membership to record levels (nearly 500). According to contractors and suppliers who are active in the association, membership provides added value for marketing, public relations, networking and education that are not otherwise available.
Portland and Oregon are relatively small business circles, so people talk to each other and often do business with each other. Reputations and professional credentials are more important than ever. Although competitive pricing is an important piece of the pie, reliable service and expertise is even more important.
It’s clear that remodeling contractors and suppliers talk to each other a lot. In these uncertain times, one of the best sources of information for how things are going and how people are dealing with the challenges of the economic downturn is each other. It’s not surprising that contractors tend to collaborate with suppliers and specialty contractors who are fellow members in order to count on their professionalism and ensure that their clients are satisfied.
The mission of the Oregon Remodelers Association is “to enhance the ability of member firms to succeed financially, improve the image of the remodeling industry, provide opportunities to facilitate a unified voice, and implement education and networking opportunities for member firms.” From the number of new members, it appears that they are fulfilling their goal.
### For more information Oregon Remodelers Association