When Eric Kanemoto wanted to remodel his San Jose home three years ago, he called some contractors. One was booked solid for six months and another never got back to him.
“I got a little discouraged and just backed off,” said Kanemoto. “People were pretty busy.”
This year, the 34-year-old product engineer and his wife, Kristina, hired a contractor in early February, ordered materials in March and watched the remodeling begin in April. The couple’s kitchen will be done this month, two months before they are expecting their second baby.
“We wanted to make sure we could get things rolling quick,” Kanemoto said. “With a kid, there’s never a better time to do it than when they’re not there.”
The nation’s housing crisis has benefited the Kanemotos and others like them who would have had to wait up to a year to hire a contractor during the housing boom. Now, they’re the ones in control.
The numbers help tell the story:
Americans spent $178 billion on home improvement projects in 2006, but that fell to $166 billion in 2008, according to Harvard University’s Joint Center for Housing Studies.
Local statistics reflect a similar picture. The San Jose Planning, Building and Code Enforcement Department said it issued 2,519 permits for additions and alterations on single-family residences over the past year, down from 3,111 permits three years ago.
A bad year
“Things started to get bad this year. Toward spring it really started to slow down,” said Daniel Mackey, former president of the Silicon Valley chapter of the National Association of the Remodeling Industry.
Mackey said he’s getting only about 30 percent of the work he had three years ago. His wife, Debbie Mackey, who heads the 150-member strong local NARI chapter, said contractors’ phones are still ringing – just not off the hook like a few years ago. Gone are the days of half-million dollar whole-house renovations. Today, she said, the majority of homeowners are sticking with projects under $100,000.
“You can find remodelers at the drop of a hat today,” Debbie Mackey said, noting that some of her business has gone to home builders, plumbers and electricians who previously worked on new homes, but find themselves looking for other work in the housing downturn.
While the economic slowdown and falling home values have stalled home building, freeing up contractors for remodeling work, there’s been a catch: The ensuing credit crisis has made it tougher for many homeowners trying to secure home-equity loans for remodeling. Bay Area residents accustomed to treating their homes like piggy banks are finding that not only are banks less willing to issue credit, but some of the nation’s biggest lenders are freezing existing loans.
Lucy Helveston of San Jose is one of the luckier homeowners. She and her husband financed their $50,000 remodel with a combination of savings and a home-equity loan.
“‘We had a lot of equity built up since we bought our home in 1989 for $200,000,” Helveston said. “Now, it’s worth $550,000.”
Helveston said she focused on renovating the home’s two bathrooms, which had deteriorated from a water leakage under her home.
“The floor had become soft,” she said. “It felt like you were walking on a wooden trampoline.”
Soumya Banerjee, a 37-year-old engineer who just remodeled the kitchen in his 1,500-square-foot San Jose home, said he had no trouble getting bids. His main contractor has lined up a few jobs through word of mouth. But the cabinet makers and granite countertop installers are going through a slow period, Banerjee said.
“My granite guys said they hadn’t seen a job for a couple of weeks,” he said.
But most experts believe things will turn around. Harvard’s Joint Center for Housing Studies forecasts steady long-term growth in the industry. The center projects a 44 percent inflation-adjusted increase in the remodeling business nationwide through 2015.
Rays of hope
Local NARI member Brad Hanson, a contractor who specializes in larger-scale projects and works with a team of designers and architects, also is optimistic.
“Once the banking mess is straightened out, people will feel more comfortable,” Hanson said.
Hanson is remodeling the Campbell ranch home of Angie Furlong, one of the few homeowners who paid for a large-scale renovation, adding 1,000 square feet to the family’s 1,600-square-foot home.
Since the Furlongs like their current location, their neighbors and the schools nearby, remodeling seemed to be a better option than moving to a new house.
“While we first had some sticker shock, we realized it was going to cost what it cost,” said Furlong of the $500,000 remodel. “But, with three kids, we’ll be living here for at least 15 years.”
Contact Sonia Narang at snarang@mercurynews.com or (408) 920-5073.
