June 06, 2004|By Anne Lauren Henslee | Anne Lauren Henslee,SPECIAL TO THE SUN
The home-remodeling industry continues to enjoy more business than it can handle across Maryland and the nation but there are signs that the record-setting pace may be peaking as mortgage interest rates begin to rise.
Harvard University's Joint Center for Housing Studies said homeowners are still spending remodeling dollars at the highest rates in history. But the group found that the level of growth nationwide is slowing as mortgage rates move above 6 percent and fewer homeowners are finding it appealing to refinance their existing housing loans.
"The numbers show that, nationally, homeowners remodeled less at the end of 2003 than they had in recent years," said Kermit Baker, director of the Remodeling Futures Program of the Joint Center. "This year, that trend seems to be continuing."
Consumers spent about $125 billion on home improvements in the past four quarters, according to the Harvard group. Spending growth during the first three months of the year was 2.5 percent compared with 1.9 percent growth between October and December. Remodeling spending grew 7.7 percent during the first quarter of 2003 and 10.4 percent during the final three months of 2002.
Baker said the growth was being measured against record spending in past years and that remodeling expenditures continue to be strong but at an uneven rate across the nation.
While California showed the most activity among the states, Washington, and other East Coast areas had some of the highest percentages of growth in remodeling expenditures in the nation, Baker said. The center does not collect data specific to Maryland, but includes the state in its assessment of others in the East Coast region.
Local contractors said the toughest part of their job is keeping up with demand. And while most local remodelers said they don't expect business to slow, many acknowledge that the current pace can't be sustained.
"We know that it is going to slow down eventually," said Tom Shaner, president of Maryland Improvement Contractors Association. "But everyone has a different idea of when that might occur."
In the meantime, he added, business couldn't be better.
"With the real estate market the way it is, combined with low interest rates and the ongoing need for repairs and remodeling, the demand, at least in Maryland, is phenomenal," Shaner said.
Shaner said Tropical Storm Isabel and other bad weather added to the workload of local contractors.
Judy and Lars Rusins had no intention of renovating their four-bedroom, Colonial-style Monkton home, until two trees fell through the master bedroom and bathroom and "harpooned the kitchen wall" after a windstorm in November.
As the repairs began, they decided to add finishing touches to make the house better suited to their family's growing needs.
They had the majority of the interior painted, to complement the new paint jobs on the repaired rooms. The sliding shower doors that had plagued their 16-month-old daughter's bath-time and Judy Rusins' elbows also were on the list.
They had the bathroom remodeled, with a new tub, toilet and floor. And, since the kitchen had been severely damaged, they opted to update it with a tiled backsplash, new cabinets, granite countertops and a custom-made island with "lots" of storage space, Judy Rusins said.
The home improvements, including extensive landscaping of the property's three acres completed last summer, are the last the Rusinses plan on making. The couple have spent about $30,000 on the improvements so far.
With the work nearly finished, the Rusinses are enjoying having their home back to normal - with the added amenities.
"We intend on staying here," said Judy Rusins, who grew up in the area.
Experts said homeowners should make sure their contractors are licensed by the state. In Maryland, anyone who offers any kind of home improvement service is required by law to have a home improvement license, according to the Maryland Home Improvement Commission. All licensed contractors or handymen are assigned a state license number, commonly displayed on company trucks and paperwork. Consumers can check licenses at www.dllr.state.md.us/query/home_imprv.html or by calling 888-218-5925.
And even though others are pointing to an expected slowdown in remodeling activity, the National Association of Home Builders said 2004 is off to a record start nationally. The group based its findings on telephone interviews with about 550 contractors from across the country.
"The phone's ringing off the hook," said Maryland contractor John Barone, who started his career more than 20 years and is president of Sparks Full Serve Inc. in Sparks. "Ever since the downturn in the stock market, it seems like everybody decided to shift their investment and put their money into their homes.
"People are discovering it's much better to buy a fixer-upper for $300,000 or $400,000 and put a hundred or so into it. Drive around and you can see that it's happening everywhere. People are taking the roofs off of older homes, adding a second floor, putting additions on. Pretty soon, within five years, you're going to have million-dollar homes from Hunt Valley all the way to Pennsylvania."
The resurgence of home improvement also has trickled down to hardware stores that cater to the do-it-yourselfers.
"Because the real estate market is so good right now, with these low interest rates, people are doing a lot of work around their houses," said Vince Ayd, owner of Ayd Hardware in the Rodgers Forge neighborhood of Baltimore County.
"The Harry Homeowner is doing small fix-up jobs - a broken door lock or running toilet - because that's all he needs to do to keep his house at a marketable point," he said.
