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Remodeling resurgence boosts sales for contractors

Associated Press Modified: October 3, 2012 at 3:30 pm •  Published: October 3, 2012

But while the upturn is encouraging, it hasn't yet turned into the boom that some had hoped for. After rising from a low reached at the end of 2008, remodeling activity rose sharply but then fluctuated since the end of 2009, according to the National Association of Home Builders' index of remodeling activity. It's "improving, but not as much as we thought it had been earlier," says Steve Millman, director of economic services at the NAHB.

Nick Rossi has also seen an improvement in 2012, especially the last few months. Prior to this year, homeowners "just wanted to get by with what they had. I was doing a lot of repair work," he says.

When business first began to pick up at his Boston-area company, N.J. Rossi, homeowners were looking for what he calls facelifts — changing cabinet hardware, countertops and flooring in the kitchen, but they were holding off on major renovations. More recently, customers have been digging deeper into their pockets, opting to do a whole gut remodel of a kitchen or bathroom and some are more willing to splurge on a more expensive countertop or appliance, he says.

"Right now, I have a couple bathrooms, two kitchen remodels and a small addition in the works," he says. He's bidding on two or three times as many jobs as he was doing two years ago and added on a part-time worker in March to help handle the demand.

Competitors are getting work too. Rossi says that wherever he goes, he sees dumpsters in driveways — a clear sign that major home renovations are under way.

But while business is improving, some contractors say spending hasn't returned to levels reached before the housing bubble burst. Hugins Construction in Coral Springs, Fla., is seeing a pickup in the number of jobs, but owner Rick Hugins says the market is still far from the boom he enjoyed before the housing collapse.

"There's work out there, but the level of business is much smaller than I've seen it in my career," he says. Before the housing crisis, most of Hugins' business was doing major renovations or additions that cost between $200,000 and $500,000 each.

"Today, a big job would be $60,000 or $80,000 and most of the work I see is in the $20,000 to $50,000 range," he says. "There's a lot of those, but not a lot of what had been the bread and butter for me."

Hugins does get more inquiries, especially from homeowners whose houses have fallen in value and have decided to fix up their homes rather than move. But their interest fades when they hear how much the work will cost. The problem is that homeowners can't borrow against their home equity as they did before the housing crisis.

"People say, 'we want another bedroom, bathroom or to blow out our kitchen,'" Hugins says. "When they find out it's going to cost $100,000 to $200,000, they go, 'we've got to wait.'"