Consumers More Circumspect On Home Remodeling Projects

Chicago Tribune

'Twas only a few years ago, when the housing boom was in full roar, that homeowners didn't have to fret too much over whether the money they invested in remodeling would be paid back at resale time.

Indeed, it was practically a no-brainer: Home sale prices were going up so high and so fast that remodeling the kitchen or the master bath would nearly pay for itself. Some remodeling companies had so much backlogged work that clients passed the time on waiting lists.

"These days, it's a new ballgame," said Sal Alfano, a former contractor who now is the editorial director for Remodeling magazine, a trade journal. "Now, the jobs are smaller, the scope of work has been cut back, and consumers are doing things in phases."

And, he said, consumers are squinting harder at contractors' estimates, not only to push down costs but also to decide whether the price of that redone kitchen or master bath is going to pay them back anything when it comes time to sell in a market that has become notoriously fickle and with home prices sliding.

Such born-again cost-consciousness makes complete sense in the current economy, Alfano said, but he's concerned that the infatuation with the contractor who offers the lowest bid will come back to haunt consumers.

Each year, Alfano's magazine partners with the National Association of Realtors to produce the Cost vs. Value Report, a massive numbers-crunch that tries to ballpark the return on investment for dozens of home-improvement projects, nationally and regionally, in addition to numerous metro areas, including Chicago.

It's an ongoing slide, he said. Nationwide, the payback at sale on remodeling, in general, peaked in 2005 (the height of the housing boom) at 86.7 percent, according to the magazine survey of the remodeling industry and NAR members.

"That is," he said, "it was costing you 13 cents on the dollar to build just about anything (if you were selling the house in a relatively short period).

"That's pretty cheap," he said. "Then it sank like a rock, ending up at 76 percent, or 10 points lower than the year before."

In the 2009 survey, the average payback, nationally, was about 64 percent, according to magazine data.

That's almost exactly the average for 33 remodeling projects analyzed in the Chicago area in the 2009 survey, including kitchen remodeling, bathroom remodeling, decks and sunrooms. Heading the costs-recouped list here were not the glamour kitchen/bath projects, but smaller-scale and more utilitarian jobs.

The best returns here, according to the report, were on midrange entry-door replacements (115 percent return at sale) and upscale fiber-cement siding replacements (85.8 percent).

The magazine extensively defines the parameters of each project, citing specific materials and overall price ranges, all gleaned from cost-estimating software used in the remodeling industry. In addition, this year 4,000 members of the Realtors' group weighed in on how the improvements might pay back at resale in their local markets. The full report is at remodeling.hw.net.

A midrange major kitchen remodel in Chicago (average cost: $67,332) recouped about 67 percent at sale time. An upscale bathroom remodel here ($63,402) recouped about 50 percent, according to the study.

Despite the data, not all consumers are reining in and battening down, some remodelers say.

"For the people who have the ability and want to do a kitchen remodel, I'm not seeing them skimping," said Bryan Nooner, chairman of Distinctive Remodelers in Orland Park.

"Pretty typically, we're seeing kitchen remodels in the $40,000 to $70,000 range. They're spending what they want to. They still want the granite (counters), they want upgraded wood-cabinet species such as maple or cherry, and we're doing few standard wood stains -- most everybody wants a hand-rubbed finish."

One of his recent clients, Frank Toland, said resale value wasn't a consideration when he recently remodeled the kitchen of his Mokena home. He said the job cost about $70,000, in addition to upgrades elsewhere in the house that were done at the same time.

"Resale really didn't factor in at all," Toland said. "We're not planning on moving. We're planning on staying there, and that's why we decided to do it the way we wanted.

"We hope that the money we put in, eventually we'll get it out. But we said, let's do it the way we want it done rather than cut costs because of resale value."

Matt Draus, who owns Descon Construction in Oak Park, also said he's hearing from customers who are thinking long term.

"We see people who have a little bit of money and decide they're not going to move for five years because of the real estate market," Draus said. "But we're not seeing the big blowout room additions."

Instead, he said, he's seeing smaller projects and more emphasis on maintaining and updating existing features -- jobs that require handyman services.

But more so than in recent years, he said, money talks.

"Cost is definitely getting much more scrutiny now," he said. "It's all about cost, that's a No. 1 priority."

But Draus said that bottom-lining often seems to be coming at the expense of quality. Driven by the slumping economy, the home remodeling-industry ranks are swollen with newcomers and some tradespeople who are eager to have any income at all, he said.

"I'm [offering estimates] against people who aren't honest and upfront and are low-balling it in order to get the work," he said. "There are a lot of good builders out there, but there are a lot of others who are making times harder for the rest of us."

Alfano agreed, and urged homeowners to be cautious when considering bids that are significantly below competitors'.

"What we couldn't account for [in estimating costs for the magazine study] was the number of  home remodeling jobs where the contractor cut his overhead or his profit just to keep busy, hoping that things would turn around," Alfano said.

"Others are former new-construction builders who don't yet know that they can't really do a job for a large percentage less" than competing bidders, he said.

Draus said he's seeing some companies agree to jobs that unquestionably are money-losers for them, just to keep some cash flowing, sometimes with disastrous results for all.

"[A homeowner] might get a bid of $1,000 from a guy who's about to go bankrupt or a $3,000 bid from a guy who is competent and stable," he said.

"I've been called in to finish jobs for people who took the $1,000 bid," he said.

    64%

    The national average percentage of remodeling costs recouped upon selling a home. That means it costs 36 cents on the dollar to build just about anything for your home.

    In the Chicago area, the best returns were not the glamour kitchen/bath projects, but smaller-scale and more utilitarian jobs.

    115%

    Return on sale for replacing an entry door with a midrange substitute

    85.8%

    Return on upscale fiber-cement siding replacement

    67%

    The average payback on a midrange major kitchen remodeling project

    50%

    What you'd recoup on the average upscale bathroom remodeling project

New Trend: Cash For Appliance Clunkers

Post Star

New York will launch an appliance rebate program during President's Week next February designed to boost sales of energy-efficient refrigerators and washers, state and federal officials announced Monday.

New York's Great Appliance Swap Out will offer rebates to consumers who buy certain energy-efficient refrigerators, clothes washers, freezers and dishwashers; the rebate is even larger when those customers recycle their older, inefficient models.

Rebates for high-efficiency appliances will range from $50-$105 for a single unit, and up to $555 for the purchase of a three-appliance package.

The state expects to issue more than 170,000 rebates totaling $16.8 million, all funded by the American Recovery and Reinvestment Act.

The appliance swap-out is similar to the wildly successful and chaotic Cash for Clunkers program, with one key exception: Customers will have to apply for appliance rebates on their own. Under the Clunkers program, auto dealers begrudgingly fronted the car incentives as they waited weeks or months for payment from the federal government.

For their part, appliance retailers said they expect the rebates to be popular, judging by the number of inquiries they've received since the program was first proposed in July.

At Best Kitchen Cabinets and Appliance Center in South Glens Falls, Manager Jerry Laramie said his big concern is whether announcement of the program long before it takes effect will hurt sales in the interim.

"People are going to wait for it," Laramie said of the rebate. "But when it does hit, it's going to be crazy."

For Adirondack Appliance in Saratoga Springs, there's not really a downside to the program. Owner Thomas Thibeault Jr. said he expects manufacturers to jump on the rebate bandwagon and offer their own incentives.

"It's good for business; it's a good thing," Thibeault said.

Some retailers, like Adirondack Appliance, are expected to offer free recycling; there may also be opportunities to recycle old appliances at local landfills, waste stations and recycling centers.

Gov. David Paterson said Monday that the program will provide an "important boost" to the economy early next year, while keeping old appliances out of landfills through recycling incentives.

"This program will offer more than 170,000 New Yorkers the chance to save hundreds of dollars a year by replacing their old kitchen appliances with new, energy-efficient appliances and, by offering additional incentives for people to recycle, will help avoid placing additional burdens on our landfills," he said.

Paterson noted the state would not have pursued the program if it was not federally funded.

Appliance Sales Could Be Heating Up

The Washington Post

One of the oddest phenomena of the boom years was how kitchen appliances morphed into sexy, high-maintenance trophies. Even as we were fleeing our kitchens at unprecedented rates to dine out, those kitchens underwent a remarkable transformation, tarted up with Viking ranges and Sub-Zero fridges that cost as much as a Korean compact car.

These days flickered out when the real estate market imploded. When the demand for McMansions vanished, so did the need for high-end appliances to put in them. According to the market research firm NPD Group, spending on major appliances dropped from $24.9 billion in 2007 to $21.8 billion last year. Although that might sound like a lot of money, a lot of that spending comes from nondiscretionary replacement costs; if your fridge bites the dust, you're not going to wait months before getting a new one. And so the decline begins: Since the spring, Viking Range of Greenwood, Miss., has laid off more than 300 workers in five waves, according to the Mississippi Business Journal. Britain's Aga Rangemaster shed about 400 jobs.

But there's a plot twist unfolding in this riches-to-rags story. Even as analysts speak of a "new normal" and a need to adjust expectations, a kitchen that could have been lifted from the set of "Iron Chef" has never been more attainable. Mass-market offerings have been steadily creeping up in price as consumers, particularly younger ones, demand higher-end touches or a sleek, professional look on middle-of-the-road models.

While boomers and seniors are winding down their appliance purchases, millennials are just getting started, and their tastes are higher-end, says Mark Delaney, a home analyst for NPD Group. As a generation that grew up watching the Food Network, today's newly minted adults don't see features such as stainless-steel finishes as frivolous. The industry has responded in kind: Viking rolled out its lower-priced Designer Series line last month, and Sears recently sealed a deal to be the exclusive provider of Whirlpool's Jenn-Air brand, which offers high-end touches such as touch-screen controls. Hamilton Beach's coffee and espresso makers are stainless steel and state of the art. Such products are several notches down from the luxury appliances that inspired them, but they're still pricier than base models.

As a result, analysts are cautiously optimistic that appliance sales are due for a turnaround, albeit a slow one. The shopping habits of the wealthy as tracked by the research firm Unity Marketing show a four-percentage-point increase in the number of people making kitchen and bathroom purchases, which includes major kitchen and laundry appliances as well as such things as cabinets and countertops, in the third quarter of this year compared with the same period last year. Unity founder Pam Danziger attributes the uptick to consumers' desire to make staying at home with indoor grills more pleasant while boosting their homes' resale value.

This increase in purchasing will benefit retailers before it hits manufacturers, because current inventory will have to be cleared out first. But Sub-Zero and Wolf have already rehired a little more than 200 employees at facilities that crank out their high-end appliance lines, and the company said in a release that it will add 60 new jobs at these sites over the next several months.

There are a few other factors driving this recovery. Growing concerns about energy consumption, along with some stimulus-related Energy Department incentives being doled out at the state level, are also giving the sector a boost. Whether consumers are concerned about their carbon footprints or the cost of chilling and heating their leftovers, they're turning to energy-efficient appliances. The government rebates sweeten the pot.

One type of product that stands to benefit hugely from this embrace of the eco-friendly is the induction cooktop. Already popular in Europe, ranges with this feature have trickled into foodie consciousness but are just cracking the mainstream in the United States. They're not cheap -- a Consumer Reports review last year found that they start at a little less than $2,000 -- and they can require an ancillary investment in new pots and pans because the electromagnetic reaction that powers them won't react with aluminum or copper. In exchange for these quirks, though, users get a snazzy-looking appliance that boils water in roughly half the time of a conventional range and consumes far less energy.

Offering convenience as well as energy savings, microwave ovens are outperforming their full-size siblings in the retail arena, according to data from the market research firm Mintel. Among all cooking appliances (including ovens, ranges and toaster ovens), microwaves made up roughly two-thirds of shipments in 2009. David Lockwood, Mintel's director of research, says this relatively higher demand is partially because microwaves tend to wear out faster and be replaced more quickly than major appliances.

The most significant legacy of premium kitchen appliances is the stainless-steel aura of the upscale they have left on more prosaic offerings. Even at their peak of popularity, five-figure stoves never cracked the mainstream, but the aspiration they inspired has fundamentally reshaped a formerly utilitarian market. Although it's unlikely that many of us will be in a position to drop $10,000 on a cooktop even after the economy is humming along again, we're increasingly receptive to dropping an extra $500 or so for a less-fuel hungry model, one tricked out with a pro-style flourish or two, or one that's just prettier than the white enamel workhorses of yore.

Valencia County Sites Featured As Registered Cultural Properties

Valencia County News-Bulletin

When New Mexico became a state in 1912, the 1,458 square miles that was to become Valencia County had already seen a good amount of history. As time marched on, rivers shifted course, political boundaries were drawn and erased and roads were carved, paved and sometimes rerouted.

Now the population of the county is closing in on 90,000 people, spread up and down the valleys and sprinkled across the llanos. While they are looking forward, they are also looking back and taking steps to preserve the precious history of the area.

According to the New Mexico Historic Preservation Division's Department of Cultural Affairs Web site, there are 27 registered cultural properties in the county, including buildings and areas that are culturally sensitive. Many of those listed on the state's registry are on the national historic registry as well.

One of the oldest structures in the county is the Miguel E. Baca House in Adelino, which sits adjacent to the Camino Real to its east and not far from the Rio Grande to its west. Originally built in 1896, the structure measured 80 feet by 30 feet, with building-length portals on both its east and west sides.

A large 30-by-35-foot room dominated the north end of the building, while six rooms on the south end served as spacious living quarters. The adobe walls measured 18 inches thick, ideal to keep warm air in during the winter and cool air in during the summer months. The old building still stands as a prominent landmark on N.M. 47, and was placed on the state registry in 1974 and the national registry in 1978.

When the railroad pushed west, that opened up new travel opportunities for people on the crowded east coast. Many of those seeking wide open spaces and opportunity dined at more than one of the Harvey House restaurants along the Santa Fe Railway. One stop along the way was in Belen.

Good food and better service by the Harvey Girls made the stopover a memorable occasion for travelers.

All place settings had to be arranged in just the right manner, with napkins folded in a special way and silverware perfectly polished. There can be no chips in the plates, cups or saucers. Full pitchers of cold water must be placed at every other place setting on the lunch counter. Fresh coffee, made with a pinch of salt, must be brewed. Every Harvey Girl carries a small towel on her arm to wipe up even the smallest spot or spill.

The Harvey Girls must also be as impeccable as possible. They cannot wear lipstick or any other makeup. Hair nets must be in place, with hair worn up, regardless of current styles. Uniforms must be freshly cleaned and ironed. Entire uniforms must be changed if even a tiny smudge appears. Everyone was required to wear white stockings with no runs and girdles, as checked daily by female supervisors.

The Harvey House closed in 1939, and reopened briefly during World War II to help feed the dozens of troop trains that came through town daily. Through the efforts of the City of Belen, the Valencia County Historical Society, the Belen Chamber of Commerce and countless volunteers, the building was preserved and is now a museum dedicated to the Harvey Girls, railroad memorabilia and is the home of the Belen Model Rail Club.

In addition, the museum hosts several art shows during the year ranging from exhibits of oil paintings, quilting, fiber arts and photography.

If you like watching freight trains, the museum is located on the west side of the Belen rail yard, which sometimes sees nearly 100 trains a day. The Harvey House was added to the state registry in 1982, and the national list a year later.

The Felipe Chavez house, which is was placed on the state and national historical registers in 1980, was built in 1860 by a pioneer merchant, trader and rancher. Felipe Chavez made his fortune with business interests ranging from the New York Stock Exchange to mining in Mexico.

Although there were several haciendas in the area, the Chavez estate was the largest. It included cornfields, extensive pasture, cottonwood groves, a mercantile and, eventually, a school for girls.

Ymelda and Leroy Baca and their daughter, Gretta, began work in 2004 to open the house to the public and share Valencia County's history.

For the first year, Gretta, who still lived in the area, began the renovation, while Ymelda and Leroy pitched in during visits. But when the couple returned home in 2005, the whole family came together to make their dream a reality.

From the beginning, the family's goal was to restore the house and property and create an institute for the preservation of culture, language and history.

Since Chavez's death in 1905, the keys to the historic house have changed hands more than a dozen times. Through the years, the house has been burned, damaged by floods and even vandalized, but the legacy of the property and of Don Felipe Chavez — also known as "El Millionario" — lives on today.

Another attraction the Bacas hope will draw crowds is a ghost story. Some people believe the spirit to be that of Felipe's daughter, Margarita Chavez. It's said that because her father left her out of his will, her spirit still roams the house.

As for the future of the Felipe Chavez house, the Bacas will continue to rent it out for weddings, parties, reunions and retreats. But their main objective is to host gatherings that will educate people about history and culture.

Ymelda, Leroy and Gretta hosts events that include history lessons, ghost stories, music festivals, poetry readings, art exhibits and plays. The family said the house is open for field trips for school children.

If you drive past the Jarales School located south of Belen on Jarales Road, you will see a building that has been there since 1932. It even looks the same as it did when the first students stepped through its doors. If you step through the door today, things will look nothing like they did in the 1930s.

The building has been renovated, revamped and reinvented as the Don Jose Dolores Cordova Cultural Center. The central hall is finished in white oak, and there is running water and plumbing, handicapped accessible bathrooms, a kitchen and central heat and air.

The soaring ceilings and walls of windows remain, as do the memories of those who attended the school before all the modern niceties were installed.

The cultural center held its grand opening in March 2007, and the schoolhouse has been on the state registry since 1994.

Did Joan and Joe Arvizu ever doubt their decision to move into their Bosque Farms home, a historical property in need of some tender loving care to restore it to its original glory?

The night that dirt fell on Joe's face probably gave the couple pause, but they persevered. The roof of the 1935 home was insulated with dirt, and some had seeped through the viga-supported ceiling and onto Joe.

Well, things at the home on South Bosque Loop have changed since 1992 when the Arvizus moved in, but not much. There's no more dirt on the roof and the doors are more secure, but the family has worked diligently to ensure that the house is just like it was in the Dust Bowl era during which is was built.

The Arvizus are only the third family to live in the 68-year-old dwelling. According to Joan, who's on the board of the Valencia County Historical Society, her abode was one of 44 buildings erected in the vicinity by the federal government's Works Progress Administration and intended as housing for farmers.

About 2,800 acres of land were purchased in the area from an old land grant and used as part of President Franklin Roosevelt's New Deal. A similar homestead site was also created in West Virginia.

Forty two of the buildings were dedicated to housing, and a lottery was used to determine which families would have the opportunity to buy them. Charlie Jackson and his wife, Flora, were the first to reside in what is now the Arvizu home.

In 1944, George Shore purchased the home and the 58.8 acres of land. The farmer had his own dairy and lived on the property until about the mid-1980s.

Indeed, the house is obviously not of this era, and there are indications of its age throughout. A built-in ironing board emerges from behind a door in the home's "mud room," dating from a time of popular ironing centers.

The residence's only bathroom has the original bathtub, an antique-looking porcelain tub on legs. The home's light comes from bulbs that jut out from the walls instead of the ceiling. And, in an oddly ahead-of-its-time touch, the electrical outlets are designed to spring closed when plugs are removed from the sockets.

The home was placed on the state registry in 1988.

The mansion was originally built in 1881 by Don Antonio Jose Luna after the railroad negotiated a right-of-way directly through the original family hacienda. In compensation, the railroad agreed to build a home to any specifications named by Don Antonio.

After Mrs. Luna saw southern plantation homes, she wanted the home designed to complement them, but with a New Mexico twist. The 10,000 square foot home was built from traditional adobes.

Don Antonio died the year that the house was completed, so possession of Luna Mansion fell to his son, Don Tranquilino. It was thereafter passed down through the family and reached its heyday between 1900 and 1920, when Don Eduardo Otero and his wife Josefita Manderfield Otero took over the home.

The home was eventually purchased by Earl Whittemore in the 1970s, a local with a passion for history and preservation, and turned into a premier steak house. After three decades of ownership, Whittemore sold the property to the Torres family, Hortencia and Pete Teofilo Torres, daughters Johnnah Torres and Joell Torres and son Peter Japhen Torres.

The family spent months renovating the mansion from top to bottom and quietly reopened the fine dining establishment in August.

The mansion was placed on the state registry in 1973, the national list in 1975 and along with the surrounding fence, was added to the 2009 Most Endangered Places List by the New Mexico Heritage Preservation Alliance (NMHPA).

Jan Biella, deputy state historic preservation officer, encourages people to nominate properties for the registry.

"Every two months, the board entertains new nominations," she said. "It's always surprising what's not listed."

She said listing on the register is considered an honor. "It does not impose anything on the owner. And there are financial incentives such as income tax deductions."

China Suppliers Ready For Uptick In Housing And Construction Market

Global Sources

Durable materials help makers integrate natural stone trays, decorative prints and other add-ons.

More China suppliers of shower enclosures will be looking to resume their foray into the upper market segments on the back of improving economic sentiment across domestic and overseas destinations.

Companies, in fact, are already expanding their midrange selections. This line promises the fastest export growth, with its share in the country's entire output rising from 40 percent a year ago to about 50 percent in the past six months.

To carry out this upmarket shift, the majority of makers will install value-added features such as massage and shower functions in future releases.

Accessories are likewise being produced from superior and durable materials, including built-in trays that may be fabricated from natural stone rather than acrylic. For this case, marble is the material likely to become popular in the next three to five years.

Decorative prints and graphics are being inserted between glass sheets as well. This ornamental layout is commonly available in the high-end line where the panels can be as thick as 10mm.

To speed up recovery, most manufacturers are also looking to establish new routes abroad as both the EU and the US, despite being China's biggest markets, have become relatively saturated.

In the second half of 2009, companies redirected shipments of low-end and midrange products to Eastern Europe, South America and North Africa. Foshan Korra Bath Ware Co. Ltd's exports to Eastern Europe have 4mm tempered glass panels while those for the EU are 2 to 4mm thicker.

China suppliers offer mainly semiframed and framed models, with each line accounting for approximately 40 percent of the country's total output. Frameless variants, which gained popularity during the economic crisis when manufacturing inputs were costly, constitute the rest.

Going for $60 to $100 each, low-end designs use tempered glass with a thickness of 4 to 6mm. Their metal components are aluminum or stainless steel coated with chrome.

Midrange models are priced at $101 to $150 and come with 6 to 8mm-thick tempered glass. Frames are made of chrome-plated steel or copper. The built-in trays are of acrylic.

At $151 to $200 each, high-end variants adopt 8 to 10mm tempered glass and copper frames with a nickel or chrome finish. The trays are constructed from acrylic or marble.

Materials for bath and shower enclosures are typically procured from domestic suppliers, but these can also be ordered overseas. Most fixtures are compliant with international standards.

Makers generally adjust their prices according to manufacturing input costs. In the next six months, most will offer stable quotes as material rates are expected to remain close to current levels. Copper rose from $1.80 in March to about $2.70 per pound in September 2009. During the same period, aluminum went up from $0.64 to $0.81 a pound.

China is home to more than 400 suppliers of shower enclosures and cubicles. Over 80 percent of enterprises are privately owned, most of which have small or midsize operations. Small suppliers ship less than $10 million worth of products annually to overseas destinations. They have fewer than 200 workers and R&D departments with eight members at most.

Midsize companies send abroad $10 million to $15 million worth of shower enclosures each year. Many have workforces numbering 200 to 500, including 10 to 20 in product development.

With annual export revenues exceeding $15 million, large makers employ more than 500 personnel. Their R&D teams are made up of at least 20 engineers.

Over 90 percent of China's supplier base offers related products such as sauna rooms and bathtubs.

Some manufacturers provide fixtures, including showerheads and panels. Those near ceramic hubs turn out toilets, sinks and other sanitaryware.

With vast sources of raw materials and support factories, the provinces of Guangdong and Zhejiang stand out as the key manufacturing centers. The former accounts for 70 percent of the country's output and ships mainly midrange and high-end models. Well-known international suppliers are also based there.

With relatively lower production outlay, companies in Zhejiang can offer designs that are more affordable than Guangdong's.

Zhongshan is the center of Guangdong province's shower enclosure industry and is recognized as such by the China Hardware Association. The city is home to roughly 110 suppliers, 90 percent of which are manufacturers.

Some of the well-known companies in the area are Zhongshan Ally and Zhongshan City Shali.

The proximity of the hub to Hong Kong and Macau continues to benefit the local industry, allowing makers to account for almost one-third of mainland China's overall exports.

Midrange and high-end designs comprise the bulk of the base's shipments.

To foster growth, leading makers there have set up research centers that focus on advancing new designs. The local government complements this initiative by assisting companies in applying for patents.

Note: All price quotes in this report are in US dollars unless otherwise specified. FOB prices were provided by the companies interviewed only as reference prices at the time of interview and may have changed.