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TOUGH AS NAILS

THE BALTIMORE SUN

Homeowners who are putting in additions to accommodate family moving in are giving a much needed boost to business at Trademark Remodeling in Eldersburg.

At Starcom Design Build in Columbia, clients feeling a bit more confident about the economy are investing in home repairs and tackling small renovations.

And at Wall to Wall Construction in Catonsville, homeowners who might have launched big home renovations in more robust times are still spending, though not as much and on smaller projects.

Customers are becoming less scarce for Baltimore-area remodelers who have been struggling through the recession. Still, most companies say the market remains difficult and highly competitive.

"You're seeing projects that people feel they have to have done," said Jay Van Deusen of Van Deusen Construction Co. in Bel Air, who said he expects business to be off from his company's typical $2.5 million in sales. "Consumers are still very leery of spending money."

One of the worst economic downturns in decades has left remodeling companies with far fewer calls as homeowners deal with less equity in their homes, fewer financing options and employment worries. Competition for work has increased as homebuilders have joined the ranks of remodelers seeking work and more contractors go after the smaller jobs they might have turned down in better years. Some say they are resigned to another slow year.

Residential permits for alterations, additions and repairs have plummeted 27 percent in metro Baltimore this year through August, compared with the corresponding period in 2008, according to statistics from the Baltimore Metropolitan Council. The number of permits issued through August - 4,552 - has fallen by nearly half since 2006, when activity for the January-to-August period peaked at 8,250 permits, council statistics show.

To stay afloat, remodelers have trimmed overhead costs, stepped up marketing efforts or diversified into jobs such as window or siding replacement.

"It's a struggle everywhere," said Greg Miedema, a remodeler from Tucson, Ariz., and chairman of the National Association of Home Builders Remodelers. "Everyone is scrambling for whatever they can do to make sure they're in business next year. The reality is it's a trying time."

Van Deusen said the size of the average remodeling job has declined for his company.

"Instead of a two-story family room downstairs and a master bedroom upstairs, now it's basements, repair work, windows," he said.

Homeowners are more likely to undertake projects in the $50,000 to $70,000 range, and there's been a jump in requests for the $10,000 to $20,000 jobs, said Joe Duvall, president and owner of Annapolis-based River Crest Design Build. He said the most common jobs are bath and basement renovations.

"It's very competitive right now," he said. "Lots of people are asking us as contractors to come out, but they're not really committed to moving ahead. They're looking and thinking about it. There's not urgency like in the past."

Numbers of inquiries have dropped precipitously, he said, and the company now goes out seeking work that used to come to them.

"The leads are a lot less than what they used to be, and if you do get a lead, the client wants $150,000 renovations and only has $80,000," said Greg Wall, president of Wall to Wall. "There is new activity, and we are talking to new clients, but the majority of the time, their budget is not enough to do what they want to do. Their housing value has fallen or they can't get money from the bank."

Despite the drop in activity, some remodelers have begun to feel more optimistic about the future, according to the National Association of Home Builders' most recent index measuring perceptions of demand for current and future residential remodeling projects. The perception of current market conditions, growth in calls for bids and the backlog of remodeling jobs all increased in the second quarter compared with the first, according to the index.

And another indicator, released Oct. 15 by the Joint Center for Housing Studies of Harvard University, shows that declines in owner spending on home improvements will moderate through the end of the year and the first half of next year. The university's Leading Indicator of Remodeling Activity suggests that the remodeling industry is turning a corner, with spending levels expected to start to rise next year. Owner spending is still expected to decline on a year-over-year basis, but the drop should be less severe by the second quarter, the Joint Center said.

Some local companies say they've seen some pickup in demand recently, thanks to growing consumer confidence, pent-up demand or other circumstances.

Business has been down about 10 percent for the past two years at Starcom Design, said Bob Weickgenannt, the owner and president.

But "I think the market is now picking up for the first time," he said, noting growing interest from homeowners in renovating kitchens and baths and expanding with medium-size additions. "I think we have bottomed out. It's a confidence issue. When consumer confidence starts to rebound, then the projects will rebound. You just get pent-up demand."

Eric C. Swanson, of Trademark in Eldersburg, says he considers his company fortunate to be busy in a slow market, which he attributes to having stepped up marketing efforts since business fell off sharply last fall.

"We're screaming busy," he said. "Toward the end of the second quarter, we started to see an increase in qualified leads."

If the trend keeps up, he expects to double the amount of work in the second half of this year compared with the first half, while a half-dozen jobs should keep the firm busy through March. Additions and kitchen remodels account for the majority of the work, he said. Some of the demand comes from clients who want additional space for adult children or elderly parents moving in.

Alison Hennessy called on Trademark to renovate a home she purchased for $188,000 at a foreclosure sale. She had been looking to downsize, hoping to cut back on utility bills and tax payments, when she found the duplex house in Sykesville at enough of a bargain that she could sell her existing house and use proceeds for remodeling. Part of that includes a new garage with a half bath and walk-in pantry behind it, with a master bedroom above, under construction by Trademark.

"Instead of spending $325,000 on a garage townhome, I could buy this as a foreclosure and put in $110,000," Hennessy said.

Other jobs have come Trademark's way as families have adapted their homes to accommodate family members. Eldersburg homeowner David Horn said his daughter and three grandchildren moved in last year with him and his wife and their college-age children, and "we just didn't have enough space for everyone."

They considered buying a larger house, "but the way the housing market was, we'd have to put our house on the market and since we had the additional people living with us, it wasn't market-ready," Horn said.

Instead, they launched a remodeling project to double their living space, adding three bedrooms and two baths. Besides the extra space, Horn said the remodeling gave them some nice amenities lacking in the split-level home's original design - "a very nice master bath, with a tub and whirlpool and bay windows and lots of light. And additional closet space. Now we have three walk-in closets."

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