Across Region, Remodeling Demand Is Still Strong

If you tried to hire a remodeler in the Washington area last year -- or the year before, or the year before that -- you know it wasn't easy.

Waiting six to 10 months to get on a contractor's schedule for a major addition or renovation was fairly typical. Some companies wouldn't even show up to give an estimate.

With interest rates up a little over last year's historic lows and with home price-appreciation slowing, national forecasters say the home equity-financed renovation binge may be ebbing. And that might make it a bit easier to find a contractor in many parts of the country.

But little has changed in the Washington area, according to local remodeling companies and others who watch the business.

Consumer demand is just as strong as it was last year. "Some contractors who specialize in major renovations can be booked out six months, eight months or longer," said Marla Selko, president of Urban Referrals, a D.C. company that helps homeowners find remodelers.

Remodelers who do only smaller projects "don't have quite the same backlog," Selko said. But in general, the picture here "is the same as last year. It is very, very, very busy."

Homeowners have been tapping their home equity for renovations. "They have so much money in their homes" and want to invest it back, she said. Additionally, they can't afford to move, she noted.

Vince Butler of Butler Brothers Corp. in Clifton, who is chairman of the Remodelors Council of the National Association of Home Builders, said he's not sure yet what spring will bring.

He worried a little at the end of 2005. "It seemed to be that folks were tightening up a little bit, maybe downsizing" their projects because of reports that the housing market was slowing.

"But in the last four or five weeks, we've seen a nice uptick. I'm more optimistic now than I had been," he said.

Spending on remodeling nationally this year will continue to rise and will beat the pace of growth for new home construction, predicts the Remodeling Futures Program at the Joint Center for Housing Studies at Harvard University. But forecasters there expect growth to ease somewhat compared with a 20 percent jump between 2003 and 2005. This year, spending will increase about 5 percent, they predict.

Much of the flurry of hammering and sawing has been financed by home-equity loans and cash-out refinancing. In 2004, $142 billion in home equity was pulled out through refinancing, according to secondary mortgage finance giant Freddie Mac. Last year, the total catapulted to $243 billion.

With rates on most home-equity loans expected to jump to about 7.5 percent this year, Freddie Mac is estimating homeowners will pull out $117 billion in equity.