Friday, January 27, 2012

Remodeling our Cities

The top 20 Remodeling Markets have been listed and Chicago juuuust makes it in at number 20, up from number 22 last year. Everybody keep your fingers crossed. 

Why is this important?

Remodeling basically *is* the residential construction industry in cities. The high end of this market was where I made my bread and butter for around 15 years. Then it ended.

Most of the remodeling jobs I used to work on were a result of the property changing hands, with the cost of freshening up the bathroom and kitchen rolled into the mortgage.  As @PeanutFreeMom would say,"Um, yeah, hi, nobody's buying houses anymore." 

People are not moving.  Some of this is due to poor employment opportunities and some of this is due to real estate values returning to historic norms.  (I feel it is much better on a lot of levels to think of the current real estate situation in these terms rather than the "plummeting housing values" you usually hear about.) People who bought overvalued housing can't sell and are stuck.
Say the J.Q. Public family does need to move from Urban Home A to Urban Home B.  Unable to sell Home A, they turn it into a rental. Unsure of their future in the present economy and without the cash in hand from a sale, they are also likely to rent Home B instead of buying. 

This is something I think gets overlooked in discussions about construction employment. Ten years ago, the J.Q.Public family move would have likely resulted in two sales, two mortgages, and-rolled into those two mortgages-two remodeling jobs.  It now results in two rental units. Nobody remodels a rental between tenants.  Yes, some do, but rarely, and even then, they are quick and dirty business propositions done to the lowest acceptable standards, (which makes perfect sense and is at is should be, btw). This double hit has been the big story in my corner of the construction industry, and while there does seem to be a lot of attention being given to helping get the housing market going again, I don't really see the same being done for remodeling.  
Sure, a rebound in housing in general will help the remodeling market, but tax breaks and other incentives targeted toward home remodeling, especially urban remodeling, could help spark a bounce in construction jobs.
There are a lot of reasons an urban remodeling bounceback would be great.  
  • The sheer volume and density of housing stock in the nations cities provides a lot of advantages. Most of the housing stock inside city limits is much older than the stock without, is larger (multi-unit), and holds more people.  Updating the energy efficiency of these buildings with insulation, better windows, etc. would make a huge difference to the country's energy consumption and, in the long run "pay for themselves". The large amount of multi-unit buildings makes the process more efficient as well. In places like Brooklyn and Chicago, one renovation project can result in two or three families living in more efficient homes.  
  • Density also means workers travel less far, using less money and energy to get to work.  This might seem silly until you work on a construction site in Houston, where some guys are driving an hour to work every day (done that), and then work on a construction site in a city, where many of the workers can just bike there. (done that)   This has a lot of side benefits.  Workers can have access to work without being on the hook for car payments, gas, insurance, etc.  This raises the net effect of the worker's wages.  
  • These are not tract home construction jobs.  I've worked with people who had years of tract home experience. They knew alot about a couple things and were terrible remodelers.  When you look over a sea of identical houses in a typical suburban development it is easy to see those houses as widgets, and that is exactly how they are built, as widgets, in a factory process where one crew just does the same small part over and over every day.  It is efficient, requiring only workers who can be taught one small part of the process, factory style.  Remodeling by its very nature requires the constant solving of unique problems. It is a process of discovery, deliberation, compromise, improvisation, customization, customer relations and frustration management. Learning how to go about doing it doesn't just make good carpenters, it can produce good workers with valuable social and intellectual skills they can take into other areas of employment as the economy changes.
  • The world is going to live here anyway, so it may as well be nice.