When Eleanor and Frederick Barnard decided to remodel the kitchen of their 6-year-old house in a Voorhees Township, N.J., subdivision, they arranged to have the work done by the builder of the house instead of an independent remodeling company.
Scarborough Corp., of Voorhees, which built the Barnards` home at Sturbridge Lakes, will handle the job through its new remodeling division.
This sort of thing is happening more throughout the nation as home builders seek ways to diversify and increase income amid a lengthening slowdown in housing sales.
”We were considering some changes about a year ago, but only when we found that Scarborough was going into remodeling did we decide to have the work done,” said Eleanor Barnard, a manager for an insurance company. ”Our home was built by Scarborough, and they stand behind everything with no nitpicking. That`s a reassuring feeling.”
Barnard said she had had preliminary talks about the work with two independent remodelers but had not sought bids from them for the $3,000-plus job. ”I was looking for the expert, someone with creative ideas,” she said. ”I want to keep our resale value competitive.”
Gary Schaal, senior vice president of Scarborough, said the company had dabbled in remodeling about 10 years ago but dropped it when the housing market heated up in the early 1980s.
`A separate profit center`
”We put it on the back burner, but we`re going about it a different way now,” said Schaal. ”It`s going to be a separate profit center for us, with separate people overseeing it. We`ve built close to 16,500 homes, mostly in Camden, Gloucester and Burlington Counties, and at first we`re gearing our efforts to them. It`s positively an effort to diversify, and we feel it`s an area where we can do very well. All statistics show there will be quite a bit of remodeling in the 1990s.”
Bryan Patchan, director of the Remodelors Council of the National Association of Home Builders, said the council was ”getting a lot more inquiries from builders interested in going into remodeling.”
”The most telling thing is that the builders now tend to be larger,”
Patchan said. ”We`re talking big companies that previously wouldn`t have looked at remodeling. I think they appreciate that they have a unique advantage to sell themselves to previous customers. Who better to remodel a home than the people who built it?”
About 9,700 of NAHB`s 160,000 members are involved in residential remodeling, Patchan said. He stressed that the figures didn`t give an accurate picture of the remodeler to builder ratio, however, because many NAHB members were not home builders but were involved in other aspects of housing or construction. The Remodelors Council has about 3,000 members, he said.
10% of builders involved
”I`d say about 10 percent (of home builders) are involved in residential remodeling,” said Patchan.
Patchan said a recent rise in builder interest in remodeling was a direct result of the slowdown in housing sales and new construction in many parts of the nation. The slowdown has been attributed to a number of factors, including high housing prices, a decline in consumer spending stemming from lack of confidence in the economy, easing of demand for new homes as the baby-boom generation ages, and tightening of lending regulations to housing developers and mortgage borrowers.
”The unfortunate thing is that the remodeling market often slows down itself” during a sales slump, Patchan said. ”If a lack of consumer confidence causes people not to spend money on new homes, some might not want to spend on remodeling either.”
However, the Remodelors Council this year predicted that consumer remodeling expenditures in 1990 would total $105 billion, an increase of about 4 percent over last year and of about 50 percent over 1984, when only $69.8 billion was spent.
”The residential remodeling market . . . remains the strongest segment of the building industry, though not yet the largest,” said Frank Spivey, chairman of the Remodelors Council. In 1989, Spivey said, 42 cents of every dollar spent for housing construction went for remodeling, while 58 cents was spent on construction of homes. Some experts predict that remodeling expenditures will exceed spending for new construction within a few years.
