Gary Aulik in Finance & Commerce

Builders say economic, demographic trends indicate business rebound coming
Posted: 4:33 pm Wed, September 8, 2010
By Scott Carlson

Stonework around fireplace was installed by Gary and his daughter. (photo by Bill Klotz)

At a house in a quiet little Edina neighborhood abutting Minnehaha Creek, Aulik & Associates is on a tight timeline to complete a mammoth remodeling project.

For Gary Aulik, CEO of Aulik & Associates, the makeover at 4610 Cascade Lane is more than just an ordinary job. The house is slated to become the new digs for Aulik and his family.

And the redone 1950s rambler will be featured in the Parade of Homes fall remodelers showcase, which runs Oct. 1 through Oct. 3. (The main Parade of Homes showcase, with more than 300 houses, kicks off Sept. 11 for four consecutive weekends of showings.)

Aulik’s Edina home is one of 74 homes on the 2010 fall remodelers showcase.  This past spring, the parade’s remodelers showcase featured 70 homes.

This year’s total parade remodeler home number of 144 houses is down from 174 homes in 2009 and 203 in 2008.

“The [2010] numbers reflect the economy in a very similar way as have the new home numbers,” said Wendy Danks, spokeswoman for the Builders Association of the Twin Cities, the main sponsor of the Parades of Homes. “The recession took a couple years to fully impact our participation numbers.”

Still, there is growing optimism among home remodeling insiders that the sector is starting to turn around.

“As the market improves, we expect these numbers [for the remodelers showcase] to move up to reach about 200 per year by 2012 or thereabouts,” Danks said.  She added this year’s remodelers showcase numbers are more than the showings for 2007 and earlier.

Barring a reversal of recent economic gains, there should be a healthy upturn in home improvement activity by year-end and into 2011, Eric Belsky, managing director of the Joint Center for Housing Studies at Harvard University, said in a recent statement.

Belsky’s comment came after the Leading Indicator of Remodeling Activity (LIRA), a publication of the Joint Center’s Remodeling Futures program, reported it expects spending on U.S. home remodeling to grow at a double-digit rate during the first quarter of 2011.

“The recovery in home-improvement activity appears to be moving beyond simple replacement projects and energy retrofits to broader remodels and upgrades,” said Kermit Baker, director of the Remodeling Futures Program at the Joint Center for Housing Studies. “A wider activity base would help generate the expected growth in the quarters ahead.”

Industry insiders attribute the trend to favorable construction prices, low mortgage rates and a growing trend among many baby boomers to stay put in their neighborhoods and update their existing homes or move into smaller homes and freshen them up.

Rich Riemersma, vice-president of Shoreview-based Imperial Homes Minnesota, is among Twin Cities’ homebuilders who are seeing greater activity in home remodeling.

Although his firm primarily builds new homes, Riemersma said, “We are doing a bit more modeling.”  Home remodeling accounts for about 20 percent of Imperial’s annual revenue with individual projects ranging from $15,000 to $100,000, he said.

Currently, Imperial has a handful of remodeling jobs and expects to take on at least a couple more for the fall, he said.

Riemersma said his company’s uptick in remodeling activity is just one sign that the overall housing market has bottomed out and is beginning to rebound.

“We are on a slow crawl but it is moving upward,” he said.

Shawn Nelson; president of NewSpaces, a Burnsville-based home remodeling company; also believes business is improving.

“The last couple of years have been difficult for remodelers,” Nelson said Wednesday. “But people who had been thinking about that [remodeling] in the last couple years are starting to move forward” as people are starting to feel more secure about keeping their jobs.

At his Edina Parade of Homes remodeled house, Aulik’s design and construction crews are transforming the outside appearance of the structure with partial stone façade and reclaimed timbers for entry-way rafters. Inside the house, Aulik’s team has maintained the building’s square footage but has reconfigured space to put the kitchen in a new location and bring the laundry room move to the main floor.

A growing number of Baby Boomers are becoming empty nesters; they want to either stay in their existing homes and update them or sell their existing homes and then buy smaller houses in “downsizing” their lifestyles, Aulik said.

Count Aulik among those people that are reducing their living quarters and taking on smaller homes. His family’s Edina home is about 2,800 square feet, half the size of their current Minneapolis residence.

With just two of four children left living at home, “we want less house,” Aulik said, noting, “we don’t use all of the home that we currently live in. If we encourage people to build small spaces, we should walk that talk.”