Government remodeling statistics are notoriously late and erratic. The most recent figures from the Commerce Department show annual remodeling activity running at a rate of $167 billion in the first two quarters of last year, said Gopal Ahluwalia, NAHB’s vice president for forecasting, an increase over the $153 billion total the agency recorded for 2000.

But Ahluwalia said that NAHB’s own Remodeling Market Index indicated “a substantial decline in the second have of 2001.”

However, he forecast that the industry will soon be back on its feet, and is poised to grow at an inflation-adjusted annual rate of 2 – 3 percent.

Kermit Baker, director of Remodeling Future Program of the Joint Center for Housing Studies, Harvard University, concurred that activity had slowed, on the strength of the center’s quarterly Remodeling Activity Indicator.

Baker also agreed with Ahluwalia that remodeling will be growing as about the same rate as the overall U.S. economy, but he said that the industry could experience “overnight growth of 20 – 30 percent” if there were a good system in place for financing remodeling projects. That is about how much more households spend on remodeling when they have access to financing.

Currently, only about 25 percent of remodeling clients finance their jobs through a home equity loan or something secured by their home, Baker said. Older homeowners are especially reluctant to borrow against their homes.

The remodeling decisions of the nation’s minority population will be especially important in the decade ahead, he said, when they are projected to account for two-thirds of household growth.

Minorities currently spend about 20 percent less on home improvements than non-minorities, but they spend a higher share of their dollars on professional installation. A good financing system for remodeling consumers could be especially significant for increasing remodeling expenditures in this group, Baker said.

Dan Bawden, a Certified Graduate Remodeler (CGR), said that his company, Legal Eagle Construction in Houston, had a record year in 2001, although with a little help from Mother Nature. The area was hit by flooding and hail that resulted in 50,000 roof replacements.

Among the hot items in his marketplace, Bawden listed natural stone in shower enclosures and flooring, lower-priced ceramic tiles that resemble natural slate or marble, low-maintenance fiber-cement siding, stainless steel appliances, and plumbing fixtures, and insulated windows and doors.

His customers like full frameless shower doors costing $2,000 instead of a $400 regular door.

Deep accent colors are appearing on walls, Bawden said; dining rooms are being painted deep persimmon. Decks make out of composite, recyclable materials are also popular.

Bill Owens, CGR, Owens Construction in Powell, Ohio, said his business is running into some competition from custom builders whose market for houses starting at $250,000-$350,000 is off. Builders, however, have a lot to learn about mark-ups and other aspects of the remodeling business, he said, and he fears they have been leaving behind some dissatisfied customers, a bad reflection on the industry.

With the opening of the area’s first Sears Great Indoors, Owens said his customers have become better educated about available products. Previously, there was no way to see products from American Standard and Kohler side-by-side; now there is.

The good news for Owens’ business is that a slump in the area’s economy, including commercial construction, has significantly eased trade contractor shortages. Until recently, they have been providing “amazingly lousy service because they were so busy,” he said. “They really turned their backs on remodelers.”

Empty nesters are leading demand for remodeling jobs in Owens’ area right now. An exception to most segments of the current marketplace, they are willing to spend money to satisfy wants instead of needs.

Lee Zajic, CGR, NW Renovations and Design in Portland, Ore., said that additions have become a mainstay of his city’s remodeling business in 40-or 50-year developments of homes in the 1,200 to 1,800-square-foot range.

Portland’s notorious urban growth boundaries have limited new construction there to infill projects, and some communities aren’t happy to see higher-density housing encroach upon the character of their neighborhoods, he said.

Zajic said that his customers need the help of an interior designer to pick products, a service he offers.

He isn’t all that worried about competition from builders, who don’t understand that when you’re working “in somebody’s house for three months, you either end up being a good friend or the scourge of the earth.”

Vince Butler, CGR, Butler Brothers Corp., in Clifton, Va., outside of Washington, D.C., said that he has noticed some slowdown in “trophy jobs” exceeding $250,000 for second story additions and whole-house remodels, but an increase in smaller jobs has made up for the difference.

And, Butler said, his customers are buying just as many high-end products as before the recession.

He noted an increase in jobs related to aging-in-place, and overall business has been so good that he has decided to limit his operations to a smaller geographical area. The market has been so buoyant that one local contractor has even decided to limit his business to strictly basements, in two zip codes only, said Butler.