Outlook on remodeling cautiously optimistic
According to results of NAHB's latest Remodeling Market Index, professional remodeling slowed down at the end of 2002, but most remodelers and analysts see business picking up in 2003. The RMI's component indices each fell substantially in the fourth quarter of 2002 in comparison to the previous quarter, but year-over-year comparisons – which are more appropriate because the index isn't seasonally adjusted – reveal more marginal declines.

Bill Owens, 2002 Remodelors Council chairman, sees nothing unusual in the new RMI numbers. “Remodelers aren't expecting an instant rebound in remodeling jobs this year, but we are confident that activity will ratchet back up during the spring home improvement season. Factors such as rising home values, which give people more equity to borrow against for home improvements, plus stellar financing conditions, will continue to drive professional remodeling in 2003.”

The latest RMI numbers also included a survey that revealed a slightly longer-ranged view of market expectations than the RMI's future expectations index, which gauges remodelers' confidence in conditions approximately three months out.

Asked about the number of remodeling jobs completed by their company in 2002:

• 73% said that volume had either increased or stayed the same.
• 27% said that volume had decreased.
• 89% said they expected the dollar volume of their remodeling jobs to either increase or stay the same in 2003 compared to 2002.
• 91% said they expected profit margins to increase or stay the same this year compared to 2002.

The special questions revealed that remodelers are pleased with their business activity over the past year and are expecting even better numbers in 2003.

Remodeling is more important to the economy than ever
Harvard University's Joint Center for Housing Studies (JCHS) recently released a report titled, “Measuring the Benefits of Home Remodeling,” that calls attention to how the remodeling industry played a key role in preventing the economy from falling deeper into recession during the recent economic downturn.

The report examined home equity and spending growth, demographic and regional drivers, and how the home improvement industry continues to evolve. Some of the key findings include:

• The $214 billion a year home improvement industry grew about 2%in 2002 and will double that growth rate this year.

Remodeling continues to grow despite the bumps and shakes of the current recession, according to the Remodeling Activity Indicator (RAI) devised by the JHCS. The RAI is an annual figure released quarterly that is derived from manufacturers' shipments, retail sales at supply stores, sales of existing single-family homes, and the bank prime loan rate.

• High-spending homeowners are responsible for an increasing share of overall expenditures.
  • 6.3% of owners spending $20,000 or more on home improvements accounted for almost half of the 2000-2001 total.
  • 2.7% of households spending $35,000 or more accounted for over a third.
• Minorities, and particularly Hispanics, are an increasingly important force in home improvement markets. Minorities are a growing share of homeowners and therefore of home improvement spending.
  • Home improvement spending by Hispanic owners jumped by an impressive 78% since 1995, more than three times the rate of growth for white households.
• The Remodeling share of residential investment is growing.
  • Nationally, remodeling accounts for about 40% of total residential investments.
  • In the Northeast, where homes are older and construction opportunities are limited, spending on home improvements exceeds spending on new construction.
• Remodeling activity is concentrated.
  • The top 10 metro areas for home improvement account for over 30% of total spending.
  • Coupled with the increased concentration of home building, the home improvement industry has seen tremendous consolidation at all points of the distribution chain.

New Remodelors Council leadership team takes office
Mike Weiss, CGR, CMB, CAPS, of Carmel, IN, took the reins as the 2003 Chair of the Remodelors Council Board of Trustees on January 20 during the traditional passing of the gavel ceremony at the International Builders Show in Las Vegas, NV.

Weiss — whose Vice Chair will be Doug Sutton, CGR — congratulated outgoing Chair Bill Owens, CGR, CAPS, on his work during his tenure, and promised to continue his efforts to increase awareness of the Council and teach the value of member services. Weiss will preside over the Council's Board of Trustees until February of 2004.

Also taking office were the new committee chairs:

• Vince Butler, CGR, CAPS — CGR Board of Governors
• Dan Bawden, CGR, CAPS — CAPS Board of Governors
• Jan Dell, CGR, CAPS — Education
• Finley Perry — Membership
• Tony Thompson, CGR — Public Affairs
• Alan Hanbury, CGR — Past Chairs
• Joy Brand, CGR, CAPS — Remodelor 20

Both Owens and Weiss encouraged members to become involved with the Council and its leadership during 2003. The next opportunity for members to attend Council meetings will be during the NAHB Spring Board Meetings, May 7-11 in Washington, DC. [return to top]

Three council members honored for distinguished service
The Remodelors Council acknowledged the past year's accomplishments of three individuals at the Builder's Show.

2002 Council Chair Bill Owens, CGR, awarded the Chairman's Award to council members:

• Dan Bawden, CGR, CAPS, of Legal Eagle Contractors — for his leadership and drive to get the Certified Aging-in-Place (CAPS) program off and flying last year
• Michael Strong, CGR, of Brothers Strong — for his development and stewardship of the Council's Strategic Partners program, which involves companies and organizations in the Council's efforts to promote professionalism across the country

Both of the Houston-based remodelers have been actively involved in the Remodelors Council for a long time.

Bill Owens also awarded the Council's 2002 Distinguished Service Award to:

• Kermit Baker, PhD, the director of the Remodeling Futures Program of the Joint Center for Housing Studies at Harvard University since it was created in 1995.
  • Dr. Baker's work with the U.S. Census Bureau led to the recognition of remodeling as a separate industry in the bureau's North American Industry Classification System.
  • Dr. Baker was instrumental in creating the RAI (Remodeling Activity Index), which has led to the increasing recognition of the immensity of the remodeling industry. Due to his efforts, the timeliness of remodeling statistics has vastly improved.
  • Dr. Baker is widely recognized throughout the media as an authority on the remodeling industry.

Board of Governors created for CAPS program
The Certified Aging-in-Place (CAPS) Board of Governors was officially established during the Council's Board of Trustees meeting. This is the final step to bring this red-hot designation program into formal existence.

Dan Bawden, CGR, GMB, CAPS, from Houston, TX, will serve as chairman of the new CAPS board. Dan has been the chairman of the CAPS Task Force that developed the curricula, procedures, and systems for CAPS.

The CAPS program provides instruction in aging-in-place home modifications, including a background on the older adult population, common remodeling projects, and standard barriers and the solutions to them. If you have earned the CAPS designation, have teaching experience and are interested in becoming a CAPS program instructor, contact Maria Alonso. If you have questions regarding the CAPS program contact Tara Occhipinti at the University of Housing. [return to top]

Analysts find high-end amenities in more homes
According to NAHB Director of Research Gopal Ahluwalia and Better Homes and Gardens editor Joan McCloskey, a focus on quality rather than quantity will characterize the typical new home of tomorrow. Both spoke during a press conference at the International Builders Show.

While the size of new homes seems to be stabilizing, home builders and remodelers foresee an increased focus on high quality, high-end amenities including maintenance-free materials and automated systems that incorporate greater technology. In addition, kitchens and bathrooms will get larger, and room heights will increase.

“Kitchens and baths will continue to be the two rooms of the house to which our families naturally gravitate, and new homes will reflect this trend with greater square footage devoted to these areas,” said McCloskey.

As for bathrooms, separate vanities for husband and wife are gaining in popularity — and the vanities will be located farther apart. “It appears that, much as you may love your spouse, you're simply less inclined to be right next to him when he's brushing his teeth,” she said.

Ahluwalia noted that the most significant change in homes today is the increasing popularity of nine-foot or higher ceilings. “This used to be an upscale amenity, but now we're seeing it even in average-priced homes — in fact, more than 50% of homes built last year had nine-foot or higher ceilings.”

McCloskey added that the “soft look” is now in for kitchens and baths. “People are aiming for a warmer look for their counters and flooring — this means no shiny surfaces.”

Buyers singing the praises of warming drawers, wine refrigerators and high-end dishwashers are adding these appliances and more into expanded kitchens and fitting them into base cabinets. “People are even sacrificing square footage in their living rooms to accommodate this,” McCloskey said. 

Ahluwalia called the living room “the most vulnerable room in the house,” saying it may disappear completely in homes of the future. What's much more important to today's home owners — most call it an absolute necessity — is a separate laundry room. [return to top]

Remodelers must work with state legislators to solve liability insurance crisis
To solve the nationwide general liability insurance crisis that is affecting housing affordability and making premiums more expensive and restrictive in terms of coverage offered, builders and remodelers at the International Builders Show called on their colleagues to work with state legislators to pass legislation ensuring that home builders and contractors have an opportunity to fix a problem before being taken to court.

“Many trial attorneys are more interested in winning big settlements in court than they are in fixing their clients' problems. State legislative and regulatory action is necessary to make it harder for trial attorneys to take advantage of the industry and unsuspecting home owners,” said Stuart Price, a Pennsylvania builder and the chair of NAHB's General Liability Insurance Task Force.

NAHB is advocating that state legislators work with builders and remodelers to pass “Notice and Right to Cure” legislation similar to bills passed last year in Arizona, Washington, and California. Commenting on California bill SB 800, which was enacted into law on Jan. 1, Harry Elliott, president of the California Building Industry Association, said that the landmark law requires consumers to give builders and trade contractors notice of alleged construction defects and the opportunity to “cure” a problem before litigation is initiated.

The law provides for prompt and fair settlement of claims involving construction defects by requiring consumers and renters to notify builders of alleged construction defects and actual damages. Home owners' rights are fully protected because they may bring legal action if the repairs are not made or are unsatisfactory.

By protecting consumers and making legal action a last resort instead of a first call to action, Elliott said that the new law will help to spur the production of badly needed housing in California and serve as an example for other states to follow.

Price identified 13 states — Alaska, Florida, Idaho, Kansas, Kentucky, Louisiana, Missouri, Montana, New Mexico, Oklahoma, Oregon, South Carolina, and Wisconsin — where he said, “legislatures will take a good hard look” at the issue of general liability insurance. [return to top]

Earn your CAPS designation at Restoration & Renovation
For the first time ever, the CAPS program will be offered at the Restoration & Renovation show, March 19-22 at the Baltimore Convention Center. Attendees will learn strategies and techniques for marketing, designing, and building aesthetically enriching, barrier-free living environments.

Participants in CAPS can also attend the two keynote addresses, the general session offered by the National Center for Preservation Technology and Training, and all three days of the Restoration & Renovation show free of charge.

Space is limited so sign up early. The pre-registration deadline is March 3. Visit www.restorationandrenovation.com for full details on registration or call 800-982-6247 to request a copy of the Restoration & Renovation program. [return to top]