The remodeling market is performing quite well, keeping pace with a housing market that has held surprisingly steady during the economic roller coaster ride.
``The fundamentals are very solid to support remodeling,'' said Kermit Baker, director of the Remodeling Futures Program at Harvard University's Joint Center for Housing Studies in Cambridge, Mass.
``We've got rising house prices; that means we've got rising equity. They can get that equity out at a pretty good rate. Taking it out at prime, it's now under 5 percent. In conjunction with that, we've had a lot of mortgage refinancing.''
Low mortgage rates have produced record levels of home sales, and home buyers show a continued willingness to improve their homes, Baker said at the Remodeler's Show, held Oct. 31-Nov. 2 in Indianapolis.
The caveat, of course, is that the situation in Iraq won't escalate and wreck the recovery, experts said at the show.
In a nutshell, homeowners spent an estimated $115.6 billion on remodeling from the fourth quarter of 2001 through the third quarter of 2002. For full-year 2001, the remodeling market topped out at $215 billion. Of that figure, 77 percent was spent by homeowners to improve or maintain their investment.
``Last year, remodeling numbers for rental housing weakened. [In] the first half of this year, it weakened somewhat further,'' said David Seiders, chief economist with the National Association of Home Builders in Washington. ``I think that pattern will probably continue. If you're in homeowner remodeling, the word is go, basically.''
House prices are up nearly 7 percent nationally, and the stock market is down 10 percent.
``Are people just pulling money out of the stock market and putting it into their homes? There's not a lot of evidence that's the case,'' Baker said.
On the macro level, the economy is coming back despite weird signals, Seiders said.
``We're talking about slow economic takeoff, a low-interest-rate environment, very low-inflation environment, and a Fed that's really working to get this thing going and in better shape,'' Seiders said.
On Nov. 6, the Federal Reserve Board did just what Seiders predicted by cutting interest rates one-half point.
``A little further Fed easing is not necessarily the solution to the problems that are out there, but it can't hurt,'' Seiders said. The labor market is more stable and officials believe the country will have positive job growth in the fourth quarter.
In the halls of the Indianapolis Convention Center, processors displaying wares expressed upbeat, positive outlooks for next year.
``Our business has been more than doubling since 1999,'' said Ralph Bruno, vice president of sales and marketing for Azek Trimboards, a line made by Vycom Corp. in Moosic, Pa. The firm is adding extrusion lines, which will allow it to more than double capacity in 2003. Azek cellular PVC trim boards are made in one location.
Mike Kern, executive vice president of Resource Materials Corp. in Fremont, Ohio, said his firm is adding a tri-extrusion line for vinyl siding production.
``It hasn't been a bad year for vinyl companies,'' he said. ``We started the year very strong and we're experiencing very strong growth right now.'' The firm is in the first quarter of its 2003 fiscal year. Its product mix is split between remodeling and new construction.
Howard Wasserman, president of Nailite International Inc., echoed the sentiment for injection molded siding panels. The Miami firm introduced its Cape Cod Perfection siding, injection molded on 1,000- to 1,400-ton machines.
The product's patent-pending, upward-interlocking configuration reduces installation time nearly 40 percent, the company said.
``It's what we think will have the biggest impact on our business in 2003,'' Wasserman said. ``We will continue to grow [in] double digits.''
Similarly, one North American fence extruder reported 50 percent growth in sales volume from 2001-02, with expected explosive growth during the next year.