W

hen Scott Lucas of Scott Lucas Construction in Conway finally took the plunge into full-time entrepreneurship in 2009, he did so with an eye on building homes to meet the considerable demand blossoming in central Arkansas.

As time went on and word of Lucas’ quality craftsmanship got around, he found himself fielding requests for remodels, slowly at first and then more steadily.

“I had every intention of just building houses,” he said. “Then I had a realtor call me and say, ‘Can you build me an art studio in my attic room?’ I said, ‘Sure.’ I did that and the next thing I knew she recommended me to somebody else and then somebody else to do small jobs.”

One of the jobs was a shower remodel for a client in Dardanelle, a renovation project that was new to Lucas.

“I had built a lot of new showers with the new construction process, but I had never done a shower remodel,” he said. “I drove over an hour from my house for a week and a half every day. Didn’t make a penny on it, but I learned how to do a shower remodel. I put a picture of that up on Facebook and within a week’s time I had another guy call me and say, ‘Hey, I want that exact same thing.’”

Lucas quickly saw demand for his remodeling work skyrocket, something he shares in common with contractors all over Arkansas and, as industry statistics point out, nationwide. According to data compiled by iProperyManagement.com, the remodeling market in 2022 was the strongest in a decade, with homeowners spending an estimated $465 billion on projects, a $70 billion jump in just four years.

“What’s interesting is, usually when the housing market is strong remodels are down and vice versa,” Lucas said. “Over the last three, four years, certainly the last two years, both have been super, super strong. Why that is, I don’t know, maybe because of interest rates. Interest rates were driving people to purchase homes, but the cost of homes is so high nowadays people are just taking what they have and remodeling their existing homes and still coming out ahead.

“Now, the housing has dropped a little bit with the interest rates are going up, but my phone is still blowing up for new houses and remodels. I have officially started turning down houses now. All I do are remodels at this point.”

Industry experts point to a perfect storm of factors contributing to the numbers, starting with COVID. The pandemic not only gave people the time to tackle a long-awaited project while quarantining in place, but stimulus checks also gave many the means to do so. Millions of homeowners also took advantage of a spike in home values, freeing up home equity at rock-bottom interest rates, particularly once home prices started spiraling upward.

“With the cost of new homes, people are taking a second look at just remodeling their existing houses,” said Carl Gray Henson, owner of Carl Gray Henson Builders of Little Rock. “Even though we mainly do new construction, we do a little remodeling and it’s definitely grown over the last five or six years.”

According to Houzz’s 2022 Houzz & Home Report, more than half of all U.S. homeowners reported plans to renovate in 2022 and half of those projects cost $15,000 or more. Kitchens and baths are perennially the most common projects undertaken, but in recent years outdoor living spaces have made a very strong showing. Houzz reported 54 percent of renovation projects in 2021 included some form of outdoor home upgrade and outdoor furniture sales jumped more than $195 billion between 2021 and 2022, per Statista.

“People are definitely interested in higher-end materials, particularly in the kitchens,” Henson said. “They’ll spend a lot of money in the kitchen and bathrooms.”

Homeowners going all-in with a whole-house remodel represent a smaller part of the market overall, but enough customers took on such projects since 2020 to keep builders like Henson and Bill Parkinson of Parkinson Building Group in Little Rock, who only do whole-home jobs, hopping.

“About 20 percent of our clients are people who we built a house for who want to add additional space, or they’d like us to update the house we built for them ten years ago or whatever,” Parkinson said. “Another 20 percent is realtor-driven; we have realtors who know what we do, and they send us leads for people they’re selling houses to that need to have something done.

“The other 60 plus percent of what we do on remodel work comes from architects hired by people who are purchasing a home and doing a complete home renovation before they move in. They like the bones of the house, but they would like to have modern amenities.”

The numbers also indicate the value homeowners still place on hiring a professional versus doing work themselves as almost 90 percent of projects in 2022 were completed by craftspeople over DIY. This brought an unprecedented amount of business to the door of contractors, who are still working to get caught up.

“It’s been crazy. It really has,” Lucas said. “We had to figure out how to work smarter and not harder. Because of the demand of my company, we were overwhelmed. At one point, we had 15 to 22 remodels going at any given time while we were still building houses. There wasn’t enough coffee I could drink throughout the day, there weren’t enough hours I could sleep in.

“In November 2021, I finally reached the point I looked my wife in the face at lunch one time and said, ‘This is it. I cannot keep this schedule. Customer service is going to go down if we take more work than we can service.’ So, we’ve scaled back to doing seven to eight remodels. I’ll do a couple, finish off a couple, then we’ll start a couple.”

Market demand also has been complicated by supply chain issues, availability of subcontractors and a general shortage of skilled labor, stretching out project timelines and inflating costs.

“Supply chain created very difficult timelines. You already had new jobs, so trying to explain that to your homeowners was tough,” Parkinson said. “We’re starting to see a little bit of a rebound. We’re starting to see some supply chains clean themselves up a little bit.

“Everybody talked about windows and things like that are still struggling in certain sectors, but you’re starting to see some of your plumbing come back into availability. Fireplaces and garage doors got to where some lead times are back to normal-ish. They even have some selection that you can get in a reasonable amount of time.”

Labor has been a problem in all corners of the construction industry for years and the pandemic didn’t do the situation any favors. Parkinson said the craftsmen who were working during the pandemic and afterward have been snowed under by demand across all building sectors.

“A lot of them got absorbed into multi-family housing,” he said. “Apartment use exploded, so a lot of those guys took their skills over into commercial and apartment work. We saw a lot of our labor base disappear into those spaces as well.

“In 2007-2008 we had a similar feel; the subcontractor kinda had the upper hand, had all the leverage, had more work than they could do. In 2009, 2010, 2011 we were their best friends, and we got a lot of phone calls. We’re starting to get subcontractors again asking what we have going on, when’s the next project they can bid on. We haven’t had that in three years, so it’s been nice to get those phone calls again.”

Builders said the motivation for people to have work done in the first place varies from keeping up with the Joneses to adding newfan- gled amenities such as whole-home technology to modifying living spaces to match lifestyle changes such as a growing family or kids moving out. According to iPropertyManagement, 11 percent of homeowners take on remodeling projects to improve their house’s resale value.

That can be a tricky proposition, said April Findlay, agent with the Charlotte John Company in Little Rock. Updating old carpet or dated wallpaper is always a good idea, and kitchen and bath investments generally recoup well. But, she cautions, temper expectations when it comes to getting back investment in all phases of remodeling.

“One thing that I warn people about, you are not going to get dollar for dollar every dollar that you put into your remodel,” she said. “Hopefully, [the project] is going to be something that you see transcend past a couple of years — maybe you’re knocking down walls or putting in granite or something that is not going to go out of style quickly. You are going to add value, but if you think you’re going to do $80,000 worth of work and get $80,000 in addition to how much you want to ask for the house, that’s just not going to happen.

“People who have purchased houses from me will call and say, ‘Hey, I want to do this in my backyard, or I want to do this. How much value do you think that’s going to add?’ That’s a loaded question, because I don’t know what the market’s going to do or where we’re going to be when you’re ready to sell your house. Your remodel may not be to the taste of your buyers, like in the case of a pool. Some people hate them, some people love them.”

Findlay is quick to note she doesn’t discourage anyone from making changes and upgrades to their home. She said homeowners should forget about the resale math and focus on what makes them happy and helps them gain maximum enjoyment out of the property.

“I always say do what you want, do as much as you want,” she said. “If there’s something you want that’s going to make your family happy while you’re living in the house, by all means, put however much money that you can afford into it and enjoy.”

For more than 40 years, Gary Houston Electric Company has served Central Arkansas with affordable, quality and timely Commercial and Residential electrical contracting services with a strong emphasis on customer service. We service both new construction and existing structures needing electrical repair or being remodeled.

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