The University of Iowa librarian is in the third round of remodeling of the 1930s bungalow she purchased when she moved from Chicago to Iowa City in 2006.

Back when she started in 2009, Routh wanted to remodel the home’s dated kitchen, which she described as “disastrous” and lacking in cabinet space. She worked with Bea Day Plumbers, Mark Russo Kitchen and Bath and carpenter Mark Anderson as the project team.

Based on Russo’s input, she later decided to add a ground floor laundry room, half-bath and enclosed rear porch.

Now, work is beginning on the third major phase, an upstairs bathroom renovation and expansion that will be completed in May.

Routh isn’t the only homeowner who’s decided that moving out and up isn’t the only way to improve the home environment.

And sales aren’t quite back to pre-2008 levels for most companies that handle and supply remodeling projects. But they’re getting fairly close.
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Mark Russo Kitchen and Bath Design in Iowa City had at least eight projects going on in mid-March, with another eight to 10 in the planning stages.

“We are looking ahead four or five months with projects instead of into next week or the following week,” said Mark Russo, the company’s owner and namesake. “It inspires you to maybe expand and contemplate adding an employee or two.”

When Cabinet Studio in Cedar Rapids started out 12 years ago, it was selling 80 percent of its cabinets into the new home construction market and 20 percent into the remodeling market, co-owner Devonna Wood said.

Now, the numbers are reversed — 80 percent of sales are for remodeling projects.

“We’ve seen a huge interest in bathroom and kitchen remodels,” Wood said. “Instead of building a home, they’ve stayed put if they like the location.”

Homeowners are remodeling with an emphasis on value.

“The scope of what we’re remodeling has changed somewhat,” said Jane Hagedorn of Bea Day Plumbers in Iowa City, who works on many projects with Russo.

“For a period of time people wanted to do remodels, but it would be much smaller in scope. They’d maybe redo a bath, but not add on a room.”

Remodelers said the most popular projects these days tend to be less spectacular than in the past. An emphasis on value in remodeling projects doesn’t guarantee easy profits for remodelers in some of the more competitive areas, such as granite countertops.

“Compared to a couple years ago I would say our business is off a little,” said Teresa Egli, co-owner of Granite Transformations, which has locations in Hiawatha and Urbandale.

“We’re having to fight harder for the business,” Egli said. “People are probably more price-sensitive than they’ve ever been.”

Egli said customers have been more inclined to shop on price and ask for freebies, such as “buy a countertop, get a sink” deals that some discounters offer.

At Hometown Restyling in Cedar Rapids, owner Wayne Winn said his company has handled more than 650 projects last year. He described business as “steady.”

“There’s more repair work,” Winn said. “The size of the projects is smaller.”

Winn is encouraged by contacts at recent home shows, which point to strong interest by homeowners in remodeling projects. Yet he noticed that many homeowners are sitting on the fence, concerned primarily about job security.

“We are in a new economy, and we’re probably here for a while,” Winn said.

He said the local job and real estate market have weathered the downturn fairly well, but many remain uneasy.

“They still get up in the morning, turn ‘Good Morning America’ on, and they’re talking about foreclosure,” Winn said.

Some lenders already have decided that remodeling is where the action is — in the absence of a resurgent home building and buying market.

Veridian Credit Union recently began a home-equity loan marketing campaign that will run through the fall. It is aimed partly at getting more existing homeowners to borrow against their equity at today’s low rates to improve their homes.

“We are seeing a trend where people are staying in their homes and remodeling, adding an addition rather than moving,” said Kara Van Wert, manager of consumer and indirect lending.

Home-equity-loan balances overall rose by 7 percent at Veridian in 2011. Activity reached full boil in the final three months of the year, when balances grew by 53 percent from the fourth quarter of 2010.

Many homeowners also launch remodeling projects with proceeds from cash-out refinancing, according to Doug Gilbertson, senior vice president-operations for Veridian.

“Sometimes they will just roll these funds into the first mortgage so they can keep one payment,” Gilbertson said. “We have been refinancing a lot of first mortgages.

“We had a record year in 2011. In 2012, our first mortgages are up 23 percent over the same period in 2011 — we’re up 80 percent in Cedar Rapids.”

The 10-year home equity loan rates at Veridian recently ranged from 3.74 percent to 5.74 percent, depending on loan to value ratio.

Rebecca Routh in Iowa City started her home remodeling projects with a home-equity loan, but eventually used an inheritance to pay off that loan.

She also refinanced her home to a shorter 15-year term at a much lower interest rate along the way.

Routh said she waited on the renovations until the money was available to do a quality remodeling job. The changes have made her house more appealing and livable, she said, and have increased the odds she’ll decide to stay in Iowa City after she retires in about four years.

Before it’s all over, the projects may total $150,000, Routh said. She doubts that the value of her house will be enhanced one-for-one on the investment, but wanted it to be a place where she would enjoy spending time and entertaining.

Hometown Restyling’s Winn sees some long-term trends that will boost remodeling. He said preferences in new home construction have been trending smaller, and that bodes well for remodeling demand.

Winn also believes consumer confidence likely will get a boost from the presidential election. Whatever the outcome, he said consumers will begin to get more positive messages and have more certainty about the nation’s political direction.

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©2012 The Gazette (Cedar Rapids, Iowa)

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Source: Dave DeWitte The Gazette, Cedar Rapids, Iowa