Recently, the Builder Blog caught up with Sal Alfano, editorial director for Remodeling Magazine and the Journal of Light Construction, to talk about the thriving remodeling market. As more builders take on remodeling projects, it’s increasingly important to learn the new landscape and which factors are motivating consumers to stay and improve rather than move and start from scratch.
Tell us a little about yourself. How did you get started in writing about homebuilding?
In another life, I was a remodeling contractor and custom home builder. I started out in 1971 in central Vermont learning the craft of carpentry while I worked my way through undergraduate school. I took a few years off to go to graduate school in Atlanta, where I hooked up with a remodeler and worked part-time. It made me realize how much I liked the construction business, so I moved back to New England and spent a couple of years with one of the first design-build firms in the country. In 1979 I started my own company, and a few years later I started writing about the construction business, first for Fine Homebuilding, then as the business columnist for The Journal of Light Construction. The recession of 1991 was the third I’d experienced, so I decided to make a change and accepted a job as a junior editor at JLC. It turned out to be a good fit. I not only knew the craft, I understood the business side. Two years later, I was editor-in-chief . When Hanley Wood acquired JLC, I moved to Washington, D.C. to take on editorial responsibilities for all of our remodeling-related publications and websites.
What’s your favorite architectural style?
The American Four Square is one of my favorites, and I also like bungalows. And of course, working in New England, I saw a lot of Capes and Colonials. I spent a lot of time remodeling and adding on to classic Vermont farmhouses, many of which started out as post-and-beam Capes, and had at least two major additions by subsequent generations. In my experience, the original, which was built by grandpa, had the best bones, and it was all downhill from there. But during those years working for the design-build firm, which was operated by three architects, I built a lot of modern stuff, too.
Comparing cost to value, year after year, which remodeling projects stay near the top?
Replacements are always near the top. In fact, over the years, they have consistently outperformed additions and interior remodeling. That said, kitchens and baths are still the focus of a lot of remodeling activity, and they are the rooms that prospective buyers are most interested in.
How big of a factor is energy efficiency in most remodeling decisions?
I think it’s making its way to the top of the list, but it’s not there yet. Right now, it still depends on where you live. All those years in Vermont, we spent a lot of time and energy keeping up with the latest energy technology, so energy efficiency is something I’ve always identified with good home design and good construction practice. Vermont’s winters can be extreme, so insulation and heating efficiency were important just to maintain comfort. But Vermont is also at the end of the supply chain, so fuel is expensive, and energy efficiency meant using equipment that delivered the most bang for the buck.
Since I’ve moved to the mid-Atlantic region, I’ve noticed that there isn’t as much concern. That’s starting to change, but most air conditioners are oversized and a drafty house in the summer here is not the same experience as a drafty house in a New England winter. That will change when energy prices start to take off.
Let’s talk footprint: Add on, bump out or work within the existing footprint?
The recession has really changed the way homeowners look at this issue. Big additions are simply too expensive, because they involve breaking ground, foundation work, and a lot of exterior matching to the existing home. Plus, permits are often harder to get. For the same money, you can often remodel within the existing footprint and end up with higher-quality finishes.
How can a new construction builder tap into the surging remodeling market?
It’s not as easy as it sounds. New construction and remodeling are very different businesses. I have experience doing both and not only are the margins different, but the customer expectations are different. It’s still pretty easy to enter the remodeling market, so a licensed homebuilder won’t find many obstacles there. But new construction margins won’t sustain a remodeling company for long. And it takes some education to understand the custom nature of remodeling. Remodeling customers want what they want, and even though most remodelers eventually steer them to the products they, the remodelers, prefer to use, it’s a process – some would say an art.
Are homeowners in a good bargaining position right now with contractors?
They think they are, but a remodeling project isn’t like buying a new car. It’s more like buying a car that has to be built while you’re driving it. The construction process is difficult enough on a new construction site; it’s a real management challenge when the homeowners are living in the space. So yes, homeowners can get a “good price” these days, but whether or not it’s a “good deal” is something you need to ask them after the project is completed.
What are the traits of the contractors who have successfully navigated the recession?
Good financial managers – not necessarily accounting wizards, but people who pay attention to their numbers. During the recession they reviewed their financial performance more frequently and were able to make adjustments in overhead and personnel early enough.
Good marketers. The best understood early on that traditional marketing methods weren’t working, and they changed their approach. The became much more active, more “live marketing” oriented, using events and high-touch methods to maintain contact with past customers and find new markets.
Adaptable. Companies that recognized that this was more than a temporary downturn fared the best. They recognized, for example, that smaller projects would be the new norm and made the adjustments they needed to position their companies. It wasn’t easy, and they had to make a lot of painful decisions. But once they made it through the survival mode period, they were in great shape to start to take advantage of the upturn.
Do you think consumers are remodeling for function or style?
Back in 2005, homeowners were standing in line, waiting to get on the list for a major addition or whole-house remodel. Everybody wanted the best of everything and the sky was the limit. Those days are over. There’s more interest now in “need to do” projects than “want to do” projects. Even homeowners who have no intention of selling feel less wealthy because they are unsure of what their home is worth. So they are spending to repair and maintain, and postponing major makeovers. And credit is still hard to find.
I do believe, though, that there is a lot of pent-up demand out there. As soon as people feel comfortable about economic stability, they will start thinking about remodeling projects that create new space, different space, better space. That’s especially true if they aren’t planning to sell or aren’t sure they can get the value they want out of a sale. In that position, they’re likely to think, “Why not remodel?”
Is the formal living room dead?
That’s a more important question for a builder than a remodeler. One advantage remodelers have is that their clients have already spent some time living in the space and they know what works and what doesn’t, what they want to keep, what has to go, and what’s missing. They can’t always articulate it plainly, but a good remodeler who asks lots of questions and listens carefully to the answers eventually deciphers the message.
That said, in general I think spaces that are visually connected have been the norm for a while. Small, cozy spaces are still important, but there are ways to accomplish that without actually erecting walls between those spaces. Designers like Sarah Susanka have made those ideas accessible to the general public, but the design principles have been around for a long time.
Do you think universal design has entered the mainstream?
Not yet. Where a simple hardware or appliance change will do, most remodelers are on board. But in the other areas we still have a ways to go. The kitchen and bath are still designed in traditional ways, and things like lighting and sound aren’t yet on the list for many contractors. But I think there is a lot of opportunity out there in retrofits for the increasing numbers of Boomers who want to age in place. Remodelers who get on board early will reap the rewards.
What’s the best source of information about remodeling?
Is this what they call a “softball question”? I’m hardly an unbiased judge, but the fact is the group of magazines and websites that I manage covers the whole residential industry. The Journal of Light Construction is far and away the best source for technical know-how in the industry. Replacement Contractor is the only magazine dedicated to exterior replacement professionals, and Professional Deck Builder covers a specialty audience as well. And of course Remodeling is the strongest source of business-oriented information available to remodeling pros. And all of these magazines are tied to websites, email newsletters, and live events.
I know what it’s like to run a remodeling company and I think we do a pretty good job of keeping the industry informed about what works, what doesn’t, and why.