Buildings turn to remodeling jobs

For Ron Catlett, 2008 was a pretty decent year. Heck, it was a great year.

A general contractor who prefers new construction because it’s “cleaner,” Catlett had landed a big job, enough to keep him busy and give him the best year financially he ever had.

“One big job will make a whole year for me,” he said of his small business, Ron Catlett Construction.

For other contractors in the area, 2008 marked the beginning of the downturn. The housing bubble burst and construction hit lows it hadn’t seen in decades.

Now — well into the recession and with soaring unemployment — hardly anyone is thinking new construction any more.

Catlett has lost his main source of revenue with the fall of the economy.

To get by, he has subcontracted himself out — doing framing and tile work for others. It’s enough to keep him going for now and he’s optimistic that the market is slowly turning.

His phone has been ringing more often and more people are coming to him with questions and ideas for the future. He’s drawing on past experience to keep going.

“I’ve lived through these downturns,” he said, adding that as consumers gain confidence, they will start building and remodeling again.

But for now, it’s all about getting the best deal, Catlett said.

And what looks to be the best deal is taking advantage of what already is standing and remodeling/restoring it.

In a study on the remodeling market put together in 2009 by the Joint Center for Housing Studies of Harvard University, researchers suggested that with a continuing slack housing market, owners are more likely to make improvements to the properties they already have.

These improvements could be structural and/or to improve functionality while taking advantage of available tax credits.

“Remodel work has certainly become a larger percentage of all the construction activity out there,” said Jim Sattler of Steel Creek Builders in Whitefish. “If the drag on the economy persists, I think we’ll see more people deciding to remodel than just considering it as they are now.”

The study also said the rise in foreclosures had a positive effect on the remodeling industry. The Housing and Economic Recovery Act of 2008 allocated $4 billion nationwide to state and local governments for the redevelopment of abandoned and foreclosed properties.

Flathead County had a 220 percent rise in foreclosures in January 2010 and 175 percent in February 2010 over the same periods a year ago. Data from Kelley Appraisal in Kalispell showed 1,028 notices of trustee sales recorded in 2009 with 40 percent canceled.

The increase in foreclosures could help to spur the remodeling industry here in the valley, enough perhaps to continue to support contractors until housing recovery takes place.

Brad Reedstrom, co-owner of Bigfork Builders, said foreclosures are definitely helping his business.

People new to the area who would have been buying vacant lots in years past are buying up cheaper foreclosed properties and using his business to rehabilitate them.

Prior to the downturn, Bigfork Builders dealt primarily with new home construction. The firm did a little remodeling on the side, but usually just for past customers looking to update their homes.

But about a year ago, Bigfork Builders started noticing a downturn in the volume of their business.

Now they are filling that volume with remodeling projects.

“Remodeling is a completely different process than new construction,” Reedstrom said. “It’s hard for a builder to just go in thinking like a new builder.”

But the adjustment is necessary.

Even though housing construction was up 2.8 percent nationally in January, according to the U.S. Commerce Department, Patty Gregerson of the Flathead Building Association said the only movement seen here in the valley has been in the remodeling sector.

“We’re definitely hearing chatter that people are going to be doing more remodeling projects this year,” she said.

A good indicator of the future will be how many attend the upcoming Home and Garden Showcase March 19-21 at the Flathead County Fairgrounds.

“I think the decision [to remodel] ultimately comes down to a feeling of confidence and long-term financial security before jumping into a much larger investment such as a new home or commercial venture requires,” Sattler said.

Reedstrom said he already is seeing consumer confidence rise as he continues to field calls for work.

“In the last two months we’ve seen a big uptick in interest in remodeling and construction,” he said, adding that during those two months he’s had more inquiries about new projects than he had in the previous six months combined.

The entrance of new-construction contractors to the remodeling industry has taken its toll on those who previously devoted themselves to the rehab business.

For Edwin Fields of Fields Construction Inc. — who calls remodeling his bread and butter — the addition of more contractors has put a damper on his workload.

He’s still keeping busy, but the scope of his work has shifted from big additions and alterations to a lot of redecorating work — upgrading floors, countertops, painting etc. It’s still money in the bank, but as Fields said “you need a lot more small projects to make up for the big projects.”

Reporter Erika Hoefer may be reached at 758-4439 or by e-mail at ehoefer@dailyinterlake.com