Remodeling roller coaster Story at a Glance

By Bill Greene, CRA President National Association of the Remodeling Industry

Jl rsetrE the ongoing housing

Uand real estate slump, the professional remodeling industry continues to show strength. The latest Census Bureau report shows high maintenance and repair expenditures for homeowners, with experts anticipating year-end figures reaching over $l l1 billion -alj%oin- crease since 1989.

Most NARImember contractors report slow but steady business. Many contractors find themselves looking for their next job as they put the final touches on the job they've just finished. This lack of a job back log will be an important factor as we head into the colder months when business generally slows until spring. In times such as these, homeowners tend to maintain with hard-earned money being spent on repair and replacement rather than on major, "non-necessary" remodeling projects. In fact, this movement towards repair and maintenance has given some remodeling firms the chance to make up for lost business by open- ing separate handyman divisions. These operations are devoted entirely to projects that a homeowner must repair due to everyday wear and tear on a home. Jobs such as these may have been turned down during more prosperous times, but are now welcome.

While overhead costs have remained stable, many remodelers have had to lower their profit margins to remain competitive. This, of course, means that smaller contractors have a more difficult time withstandine the storm than larger firms. Whai has helped the professional remodeling contractor is the vast array of new building industry products and product Iines that have made previously custom products standard. These new products have allowed homeowners as well as contractors to become much more creative.

Professional remodeling industry continues to show strength...new building products allow cost effectiveness ...tighter cash flow hampers contractor buying power.

While recovery seems to have taken a foothold in the West, remodelers in other regions continue to ride the roller coaster of economic ups and downs. I believe these inconsistencies will continue through 1992. I believe remodelers will see steady work with perhaps occasional quiet weeks during the winter months. This will, of course, lead to reduced cash flow and buying power. Little to no product inventory will be kept on hand since cash flow will be tight and profits lower. This means remodelins contractors will be paying a little m6re per item for smaller quantitiesjust enough to get through the presentjob.

We can only hope that lending institutions will continue to loosen up on credit and keep interest rates low.