Contractor Update

"Area home prices have dropped more than 4 percent since the first of the year, and Central Massachusetts remodelers say their jobs have slowed down or been scaled back from what they were even a year ago."

"'I've seen everything since the early 1980s,' said William J. Morin, owner of Bill Morin Construction in Northbridge. 'I've been through three recessions. I haven't seen it this bad. I would average almost a call a day, but now I’m not getting a call a week.'"

"Guy A. Webb, executive director of the Central Massachusetts Builders Association, said some homeowners who would pay for remodeling projects with their home equity have probably already used it for other things."

"In his own contracting work, Mr. Webb said, more than half of his customers used the equity in their homes to pay for their projects. 'Tapping into equity is very common,' he said."

"'I think my membership is pretty well-prepared for this,' Mr. Webb said. 'They scaled down their operations already. I assume some let go of some employees. A lot of builders and remodelers… just use subcontractors now. They're just calling them less.'"

"Kenneth R. Gaumond, owner of New Surroundings in Auburn, said the housing market correction has not resulted in more home improvement spending, as it had in the past. 'Spending is down everywhere,' he said. 'People are still more likely to adapt their home to their needs. It's not scaring people away from projects, but they're scaling down their wish list.'"

"During the housing boom, homeowners took advantage of their growing equity, using home equity lines of credit for college expenses and purchases that could be paid off more cheaply than with a credit card's higher interest rate."

"'They're continuing to borrow, but at a slower pace,' said Gus Faucher, director of macroeconomics at Moody's Economy.com. 'Price growth (in homes) has come to a halt. People have been borrowing against their equity. And there is less equity. People are strapped. There's less ability to borrow.'"

"George Yacik, a VP a New Jersey firm that studies the home mortgage market and home equity lending, said the dollar volume of home equity borrowing in the Worcester area is about half of what it was last year. Dropping house prices have an effect, too, he said. 'That certainly plays a role. Their equity is not growing like three to five years ago. People have been tapping their equity all along.'"

"Walter Plew, owner of Gemini Home Improvement in Worcester, said that with the slow market and oversupply of houses, there is evidence they may be doing less. 'Last year and before, with the market up, there was more money available to spend,' he said. 'They've dropped doing the big kitchen and bathroom. For now, they're doing painting.'"

"'The lumberyards, Home Depot, the subcontractors, they all say it's dead. Builders are going into the remodeling business. That was always the golden egg when home sales dropped off. There's a lot more people in the business now,' Mr. Morin said. 'Mr. Morin, who has been in business 21 years, said the volume and scale of his jobs now are less than in previous recessions."

"'In the past, when new construction slowed, home improvement increased,' Mr. Morin said. 'Now, new construction and sales of existing homes are in the gutter. Values are dropping as well. Home improvement is off. People have less disposable income than they had five years ago. I make less money now than I did five years ago.'"

Labels: construction jobs, Construction News, Remodeling Jobs