MAE ANDERSON, AP Business Writer
NEW YORK (AP) — A downturn in the housing market is spilling over to carpenters, landscapers and other small businesses. These companies are losing money when homeowners are less likely to renovate their properties.
Inflation had already caused some homeowners to delay major renovation projects as prices for building materials, fixtures and appliances skyrocketed. More recently, rising mortgage rates have led to fewer homes being sold.
Carpenter Bill Albritton, who has owned Albritton Custom Carpentry near Charlotte, North Carolina, since 2004, began booking months in advance in early 2004 to build custom kitchen cabinets for homes in Charlotte’s historic district. Completed a full replacement. However, he has seen a slowdown in the last two months.
The Charlotte metropolitan area saw a 19% drop in the number of homes sold between June and July, down about 21% from July a year ago, according to Re/Max’s monthly National Housing Report. doing.
political cartoons
Albritton fills up 30 days in advance, up from the usual 90-160 days. Meanwhile, his costs across the board have increased him by more than 30%. The plywood he uses jumped from $72 to $140 per piece around Christmas. He’s back at $85 a piece, but still higher than before. And he struggles to find hinges at any price.
Albritton is looking to pivot into small carpentry.
“Instead of building a new kitchen, we’re preparing to build what we call a ‘kitchen face lift,'” says Albritton. That means all you have to do is replace the cabinet and drawer fronts and work with a painter to paint the cabinets. It “offers a new kitchen look for a fraction of the price,” he said.
The Federal Reserve is raising interest rates to keep inflation in check, which has hovered around 10% a year at the wholesale level. The Fed could go too far and the economy could go into a slump.
“I’m very concerned about the very high likelihood of a recession following the supply shortages we’ve been fighting,” Albritton said. He’s enlisting other home remodeling companies as one of his ways to stay in business.
According to Freddie Mac, the average interest rate on a 30-year mortgage is 5.55%. A year ago he averaged 2.87%. The increase has pushed some would-be buyers out of the market, and sales of previously owned homes have fallen for the sixth month in a row. This is because the seller can spend thousands of dollars to make the home more attractive to the buyer, and the buyer can spend thousands more to personalize or renovate the new home. important for companies involved in the renovation of
Growth in homeowner spending on improvements and repairs is expected to slow in the remainder of 2022 and the first half of 2023, according to the Remodeling Futures Program at Harvard University’s Center for Shared Housing Research. The Center’s leading indicators of refurbishment activity forecast that repair spending for homeowner improvements and repair spending will increase 17.4% this year to $431 billion. Slowing to 10.1% by the second quarter of next year, total spending in 2023 is estimated at $446 billion.
Chris Doyle, CEO and co-founder of construction finance firm Billd, says small businesses need to be aware of what’s happening in their markets and consider shifting to different types of projects. increase. For example, small businesses that previously focused on building new homes should instead seek to work with remodelers. Also, as housing spending on housing is trending downward, federal construction projects may also be considered.
“Everyone will have to adapt,” he said. “Small businesses are more agile than large companies, so they have the opportunity to adapt more quickly.”
Daniel Edwards, who owns the Handyman Connection franchise in Hanover, Massachusetts, focuses on small, multi-thousand-dollar jobs like building decks, replacing windows and doors, and carpentry. In the Boston metropolitan area, which includes Hanover, July home sales fell 20% he. The average price of homes sold for him was $650,000, according to Re/Max data, down 2% from June but up 8% from this time last year.
Edwards says he’s typically booked for three to four weeks of work, but lately it’s been two to three weeks. He says customers are getting tighter on money. They want smaller jobs, look at receipts, and question the price of materials. He said he decided to install it and saved about $25. Another customer who requested a quote for gutter cleaning decided to hold off. But while business is slowing, he says the downturn isn’t as bad as he had feared.
“We certainly don’t see the normal July and August levels, but we don’t see what I feared in terms of a significant drop. People still want small to medium projects. I am,” he said.
Inflation is testing Tom Monson’s Monson Lawn & Landscaping business in St. Paul, Minnesota. He was forced to raise his prices—he now charges his $62.50 for lawn mowing. Up from $50. Lawn installation costs increased from $1,100 to $1,250 for him.
Customers who are more price sensitive are cutting costs. One of her customers, who was due to have a new lawn planted, decided to wait until next year. Other customers have reduced their landscaping appointments from bi-weekly to monthly.
Curbio is a startup that offers pre-sale home renovations without charging a fee until the home is sold. We operate in 52 markets nationwide, from Chicago to South Florida. We also started offering smaller projects as the housing market slowed.
Curbio Vice President Olivia Mariani said: “In the past, the homeowner might have been willing to wait eight to 12 weeks for her to completely demolish and remodel the kitchen. Now they want the least work possible. I have.”
So, instead of doing a full renovation, Curbio began shifting the type of project to “refresh,” like painting cabinets and refinishing hardwood floors. He has lowered the previous minimum price of $15,000 for projects, and now 30% of projects are below his $15,000.
According to Mariani, Curuvio’s data shows that cabinet revamps can help raise home prices for sale just as much as larger jobs.
“Buyers just want a low-maintenance home. They don’t have to redo an entire cabinet,” she said.
Copyright 2022 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
.