Each year, the editorial staff gathers with several business owners involved in various aspects of the remodeling industry and has lunch. What generally ensues is usually a spirited discussion on where things in the industry stand right now as well as a little looking into the future and this year was no exception. We welcomed back some familiar faces and also introduced two new members to the board.
Joining us again this year were Doug Bohannon, president of Mid-Cape Home Centers, Richard Capen, owner of Capewide Enterprises, Chris Joyce, owner of Joyce Landscaping and Tony Shepley, owner of Shepley Wood Products. New to the group were Paul Mazzola, owner of GCI Builders, and Rob McPhee, partner of McPhee Associates.
HRCC Question 1: Is the building industry realizing any benefits from the economic recovery?
Tony Shepley: This is so fascinating and if I hear the term, and I will put this in quotes, “jobless recovery,” I will jump out the window. I’m trying to think what is as ridiculous as a jobless recovery, is it like waterless irrigation? You can’t have a recovery until people have money to spend and confidence in how they spend it.
HRCC Question 2: Okay, so let’s adjust the question. Are things are better than the last time we met?
Douglas Bohannon: Yeah, but, myself, I don’t feel like it has anything to do with the economy. It has a lot to do with need. We’ve started to see a little bit of an uptick in April and that is when people were starting to open up their houses and they just wanted to fix this or that and got tired of waiting.
Paul Mazzola: I got comments from older people saying I want to do this now for me, instead of giving it away.
Bohannon: Our kitchen department is hearing that all the time. I’m spending this money before I die; I’ve been waiting long enough.
HRCC Question 3: Did the credit to homebuyers that recently expired have any effect on your industry?
Richard Capen: All divisions in my company are busy right now. The credit to the homebuyers was pretty helpful. That did stimulate the market in the $150,000 to $250,000 range. And most of those homes needed septic systems. I have benefitted from those real estate transfers. The septic inspection business is way up. In some cases, I have to turn down jobs because I can’t keep up.
Bohannon: We saw it on the remodeling side, more than anything. People were buying a house and then remodeling. We didn’t see a lot of the new construction; it takes too long.
Shepley: I think we saw some effect. But I think we saw more headlines than we saw an actual, tangible increase in business. I think credits are always a good idea. You definitely get people’s attention.
Bohannon: We saw a fair amount of activity on that (energy efficiency improvement) $1,500 credit.
HRCC Question 4: How has the real estate market effected renovation decisions; meaning, if people can’t sell their homes for what they thought they were worth, are people staying put and remodeling or adding on?
Bohannon: That’s happening. I don’t know if it is happening in droves. But, yeah, it is happening.
Rob McPhee: I know what we’ve seen is just more general maintenance (jobs). Not necessarily adding on or doing anything drastic.
Chris Joyce: I had two customers this spring that had their houses on the market and finally said: “We can’t sell it.” We are talking a million-dollar-plus property. And they stayed and we did pool projects for them.
HRCC Question 5: So more people want to create a swank outdoor living space?
Joyce: That was a huge market. Those projects are just so few and far between right now. I am finding that people are still doing projects, but they are scaling them back. And they are planning. They are saying, “In two years we are going to build the outdoor kitchen,” so my team is already running the gas pipe in to have it ready.
Mazzola: We just got a project in Cotuit, the same thing.
HRCC Question 6: How is the current economy affecting people’s product choices?
Capen: It is all over the place. It really depends. I am seeing both ends of the spectrum. Yesterday we just knocked down a
4,200-square-foot house—nothing wrong with it. The guy bought the house and a beautiful piece of land in Falmouth and we are going to build something that is 6,000 square feet with an octagon carriage house.
Bohannon: That is what I am seeing a lot of. Not a lot of big houses, but (multi-building) estates.
HRCC Question 6: Are consumers really more educated these days? And, if they are, is it more in price points?
Shepley: I think they are more educated item by item. But I don’t think they are more educated on the end result—the big picture. And there is a conflict, too. As people are more educated and expectations are higher, a lot of manufacturing is aimed at a price point that may not jibe with the high quality, high expectations. A lot of what we have to do is sort through first generation, second generation and by the third generation the product finally works. But god help the first hundred customers who come in and demand the thing they saw on HGTV.
Bohannon: Something else that we are seeing a lot of with the expectations of the product: Customers would start out at the high end of the expectation mark and then their pocketbook or something drives them to a lower product. But, their high expectations still remain. So, we’ll see the failure of a product that is used and the customer thinks it is the products fault.
Joyce: I am finding that the education that people are getting from the Internet is actually bogging down the building process. I find myself having to give back so much more information in today’s marketplace because they’re on the Internet.
Mazzola: Now I have to teach people exactly what they are getting here and what you are getting there.
McPhee: Talk about products and conceptions; what a misconception (the term) “maintenance free” is.
Capen: We run into this all the time. The manufacturers don’t really educate the consumers. They give them some ideas. And then it is our job to educate the customer. I have customers write a narrative of what they would like to see walking through their home.
Mazzola: I do the same thing. I call it the wish list. We put all the wishes in and then do the pricing and then we cut things out.
HRCC Question 6: Teardowns vs. remodels vs. new builds: What percentage of your business do you estimate each sector to?
Capen: Everyone is different. As I said, I knocked down a house yesterday, a perfectly good house. It wasn’t what the man wanted. He is going to spend a couple million dollars and have what he wants. Then, there are the people who wanted to keep the cottage and keep the old and add the new; they spend around $175,000 to $225,000 or more on the project than if they had just knocked it down. They wanted to keep their old house.
Shepley: Sometimes it is cheaper just to tear down.
HRCC Question 7: What is hot right now in trends?
Shepley: The outdoor trend is interesting. If I were restaurants, I would be worried that people are just going to stay home.
Mazzola: Pools used to be a detriment, but now people want them and build around it with a tiki bar and outdoor kitchen.
Bohannon: People want to be comfortable. I see a good number of home offices. More people are working from home. But, you know what is going out? This ‘green’ thing.
McPhee: You think back to the 1980s and geothermal heat was popular and then it was abandoned and not used. People would rather have nice appliances in the kitchen or an outdoor living space.