Remodel behavior: There's no downturn in Yakima home renovations

YAKIMA, Wash. -- When Jason Matson began looking for houses a few months ago, he purposely wanted one he could easily remodel. So he bought a 30-year-old, two-story house in Yakima and hired Fickel and Son Construction to give him the makeover.

Crews quickly began ripping out dark wood paneling and replacing it with wallboard and texturing. They're turning part of his basement into a home theater room, and an electrician is updating the lighting.

Although he had briefly considered buying a new home, Matson said he changed his mind after doing some research.

"After the banking crisis and the new rules and regulations surrounding lending practices on new-home construction, that quickly became out," said 31-year-old Matson, who declined to reveal the cost of the project. "It's cheaper to update an older home."

Matson's views on remodeling are echoed throughout the Yakima Valley. According to the Central Washington Homebuilders Association, Yakima County issued 136 permits for residential additions and alterations from January through April. This is four more than were issued at the same time last year.

In this same time period, new home construction declined significantly. In Yakima County, the number of permits issued in the first quarter of 2008 was 40, down 18 from last year.

To Carly Faul, executive director of the association, the numbers prove that people are committed to beautifying their existing homes.

"People tend to realize that the number one investment they'll make in their life is their home," she said. "Anything they can do to continue to add value to that investment is a wise financial decision."

The success of the local home-renovation industry is bucking national trends. According to the Home Improvement Research Institute, spending on home-improvement projects fell 4.5 percent to $290.5 billion in 2008. This is the second consecutive annual decline.

What's more, the institute expects sales to fall 6.4 percent more this year to $272 billion -- due in large part to the weak housing markets and a decline in consumer spending. Another factor is the increased difficulty in securing home-equity lines of credit from lenders.

While companies are laying off employees or partnering with other remodeling businesses to stay afloat, Yakima firms say the economy is affecting them in small ways -- if at all.

"We're very busy. The economy, at this juncture, is not affecting us," said Brice Baxter, owner of Baxter Construction in Yakima. "We have a full crew working."

Baxter, who is a custom remodeler and insurance specialist, employs 15 people. He does everything from fixing homes damaged in fires to replacing kitchen cabinets and roofs.

He credits much of his success to his reputation and returning customers. He had prepared for a downturn in business this past winter, only to find that his fears were unfounded.

"We weren't sure what this year would hold," he said. "We were budgeting and being very frugal, making sure we were being smart. But as of yet, business has been very good. ... There hasn't been a downturn."

Justin Wolff, owner of New Creation Construction of Yakima, credits Yakima's diversified manufacturing and agriculture industries with shielding the Valley from the brunt of the economic crisis.

To further protect himself, he said he's become more diligent in communicating with customers on what their money will buy.

"We're breaking things down a little bit more," he said. "The more time we spend with contracting the bidding, the more their confidence level rises. And with their confidence rising, it becomes a more successful project."

Jim Fickel, owner of Fickel and Son Construction of Yakima, said he, too, is as busy as ever. Still, he's noticing that the type of work he's doing has changed. Instead of doing $35,000 to $40,000 kitchen remodels, he's working on ones costing $25,000.

He believes that people are struggling more with bank financing, and he's not receiving much interest lately in building custom homes.

"I think people are still cautious about putting a lot of money out there," he said. "It'll be another year before this thing kind of turns around. ... We're not over the hump yet."

Unlike people elsewhere in the nation, Craig Burt of Seattle said he feels secure in his job as a technical support supervisor for a law firm. That's part of the reason why he's launching a $130,000 remodeling project at Evans Mobile Home Park between Moxee and Yakima.

"I've been blessed. I'm not worried about the economy and I'm not worried about my job," said Burt, who owns the development. "I want to improve it and get more rent out of it."

There are three houses and a mixture of 10 manufactured and mobile homes in the park. Because of a fire, he hired Baxter Construction to fully remodel one of the houses.

But instead of doing the bare minimum, Burt said he's taking the opportunity to gut the place and put in a new kitchen, bathroom, window trims, insulation and other features. The work is expected to take about nine weeks and will cost $130,000. Much of it will be funded by Burt's insurance company.

"Renters will be happier, and happy renters don't call you in the middle of the night," Burt said.

For people interested in remodeling their homes, there are some factors to consider, Baxter said. First, there are tax incentives to investing in insulation, solar panels and other energy-saving amenities.

Plus, people will recoup their investment in cost savings within a few years, he said.

Another factor to consider is how long people will live in their home, Wolff added. To him, making improvements makes more sense if people are staying in the same place for an extended period of time.

"Remodeling boils down to location," he said. "If you're weighing your options, ask yourself, 'Is the location desirable?' Most people who remodel like where they're at."

* Erin Snelgrove can be reached at 509-577-7684 or esnelgrove@yakimaherald.com.