Small businesses feel the pinch from slowing housing market

Aug 26, 2022, 6:50 PM | Updated: Aug 27, 2022, 7:02 am
Bill Albritton of Bill Albritton Cabinetry in his workshop in Charlotte, N.C., on Aug. 24, 2022.  A...

Bill Albritton of Bill Albritton Cabinetry in his workshop in Charlotte, N.C., on Aug. 24, 2022. Albritton is booked out 30 days in advance, compared to the usual 90 to 160 days. Meanwhile, his costs have gone up by more than 30% across the board. Plywood he uses jumped from $72 to $140 a sheet around Christmas. It has gone back down to $85 a sheet, but that’s still higher than it used to be. And he has trouble finding hinges at any price. (Rick Chastain/Courtesy of Bill Albritton via AP)

(Rick Chastain/Courtesy of Bill Albritton via AP)

NEW YORK (AP) — The chill in the housing market is rippling out to the carpenters, landscapers and other small businesses that lose out when fewer homeowners are renovating their properties.

Inflation was already causing some homeowners to delay big renovation projects as prices for building materials, fixtures and appliances jumped. More recently, higher mortgage rates have put a damper on the number of homes being sold.

At the beginning of the year, carpenter Bill Albritton, who has owned Albritton Custom Carpentry near Charlotte, N.C., since 2004, was booked months in advance and completing full custom kitchen cabinet replacements in homes in the historic districts of Charlotte. But he’s seen a slowdown over the past two months.

In the Charlotte metropolitan area, the number of home sold fell 19% between June and July, and are down about 21% from July a year ago, according to the Re/Max monthly National Housing Report.

Albritton is booked out 30 days in advance, compared to the usual 90 to 160 days. Meanwhile, his costs have gone up by more than 30% across the board. Plywood he uses jumped from $72 to $140 a sheet around Christmas. It has gone back down to $85 a sheet, but that’s still higher than it used to be. And he has trouble finding hinges at any price.

Albritton is trying to pivot to smaller carpentry jobs.

“Instead of doing new kitchens we’re gearing up to do what we call ‘kitchen face lifts,'” Albritton said. That means just replacing the fronts of cabinets and drawers and teaming up with a painting contractor to paint the cabinets. It gives “a new kitchen look for a fraction of the price,” he said.

The Federal Reserve has been raising interest rates in an effort to reduce inflation, which is running at almost 10% annually at the wholesale level. The fear is the Fed will go too far and the economy will go into a slump.

“I am very worried on the heels of the material shortages we have been battling to now look at a very possible recession,” Albritton said. He’s reaching out to other home renovation companies to partner with as one way to keep the work coming.

The average rate on a 30-year mortgage is 5.55%, according to Freddie Mac. A year ago, the average was 2.87%. The increase is forcing some would-be buyers out of the market and sales of previously owned homes have fallen for six straight months. That matters to the businesses involved in home renovations because sellers can spend thousands of dollars making a house more attractive to buyers, and then the buyers spend thousands more personalizing their new home or fixing it up.

Growth in homeowner spending for improvements and repairs is expected to slow for the rest of 2022 and the first half of 2023, according to the Remodeling Futures Program at the Joint Center for Housing Studies of Harvard University. The center’s Leading Indicator of Remodeling Activity predicts homeowner improvement and repair spending repair spending will grow 17.4% this year to $431 billion. That will slow to 10.1% by the second quarter of next year, with total 2023 spending estimated at $446 billion.

Chris Doyle, CEO and co-founder of Billd, a construction finance company, said small businesses should be aware of what’s going on in their market and consider pivoting to different types of projects. A small business previously focused on new-home construction should try to work with renovators instead, for example. And since residential home spending is set to decline, federal construction projects might also be something to look into.

“Everyone’s going to have to adapt,” he said. “Small businesses have an opportunity to adapt quicker since they’re more nimble than bigger companies.”

Daniel Edwards, who owns a Handyman Connection franchise in Hanover, Massachusetts, focuses on small jobs that are several thousand dollars, like building decks, swapping out windows and doors and carpentry projects. In the greater Boston area that includes Hanover, home sales in July were down 20%. The median price of a home sold was $650,000, down 2% from June but up 8% from this time last year, according to Re/Max data.

Edwards said he’s normally booked out three or four weeks with jobs, but lately it’s been two to three weeks. He says customers are being tighter with money: They, want smaller jobs, want to look at receipts and question the price of materials. For example, one customer decided to install a toilet paper holder himself, rather than paying someone to do it, saving about $25, he said. Another customer who requested a quote for a gutter cleaning decided to hold off. But while business has been slower, he says the dip isn’t as bad as he was worried it might be.

“I certainly don’t see normal July and August levels, but I don’t see what I had feared in terms of significant decline. People still want small- to mid-sized projects,” he said.

Inflation has been trying on Tom Monson’s business, Monson Lawn & Landscaping, in St. Paul, Minnesota. He’s had to raise prices — he now charges $62.50 to mow a lawn. up from $50. A sod installation costs $1,250, up from $1,100.

More price-sensitive customers have cut back. One customer who was planning on putting in a new lawn decided to wait until next year, and others have cut back from biweekly landscaping appointments to monthly.

Curbio is a startup that provides pre-sale renovations on homes that it doesn’t charge for until the home is sold. They operate in 52 markets across the country, from Chicago to South Florida. They’ve also started offering smaller projects as the housing market slows.

“As the market starts to cool in some areas, there’s much more sensitivity to timelines,” said Olivia Mariani, vice president at Curbio. “Before, a homeowner may be willing to wait 8 to 12 weeks to fully gut and remodel their kitchen. Now, they’re asking for the minimum viable work.”

So instead of doing a full renovation, Curbio has begun shifting project types to more “refreshes” – like painting cabinets or refinishing hardwood floors. It dropped its prior $15,000 minimum price for projects and now 30% of its projects are under $15,000.

Mariani said Curbio’s data shows that a cabinet refresh can help raise the price of a home for sale just as much as a bigger job.

“Buyers just want a home that doesn’t require maintenance — a full cabinet redo is not really necessary,” she said.

Copyright © The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

AP

Photo from Flickr...
Associated Press

Respite center opens to families of those who died in combat

A respite center for families in the United States who have lost loved ones in combat since 9/11 will open Friday on Washington state’s Olympic Peninsula.
23 hours ago
Associated Press

New Zealand man’s convictions overturned 3 years after death

WELLINGTON, New Zealand (AP) — New Zealand’s Supreme Court on Friday took the unusual step of overturning a man’s convictions even though he died three years ago. The court found there had been a substantial miscarriage of justice after Peter Ellis was convicted of sexually abusing children at the daycare center where he worked as […]
23 hours ago
Associated Press

Thursday’s Scores

PREP FOOTBALL= Auburn 53, Kent Meridian 10 Chiawana 53, Hermiston, Ore. 14 Enumclaw 51, Franklin Pierce 12 Federal Way 61, Tahoma 14 Gonzaga Prep 52, University 12 Napavine 45, Morton/White Pass 0 Onalaska 48, Kalama 30 Puyallup 29, Olympia 24 Royal 63, Kiona-Benton 6 Shadle Park 30, Pullman 24 Steilacoom 43, Clover Park 22 Sumner […]
23 hours ago
Associated Press

NC Senate candidates to meet in likely only televised debate

RALEIGH, N.C. (AP) — The two major-party candidates seeking to succeed retiring North Carolina Republican Sen. Richard Burr are meeting for what is likely their only televised debate. Democrat Cheri Beasley and Republican Ted Budd agreed to a one-hour debate being held Friday night at a cable television studio in Raleigh. Budd is a three-term […]
23 hours ago
France's President Emmanuel Macron gestures while posing for a group photo during a meeting of the ...
Associated Press

Macron at Europe’s center stage with new summit initiative

PRAGUE (AP) — Smile flashing, giving a thumbs-up, Emmanuel Macron appears at Europe’s center stage again — literally. The photo of over 40 European leaders surrounding the French president Thursday ensured a symbolic image of unity of the continent faced with Russia’s invasion of Ukraine, making the inaugural summit of the European Political Community an […]
23 hours ago
Andre McCourt carries water logged furniture out of his house Tuesday, Oct. 4, 2022, in North Port,...
Associated Press

Hurricane Ian floods leave mess, insurance questions behind

NORTH PORT, Fla. (AP) — Christine Barrett was inside her family’s North Port home during Hurricane Ian when one of her children started yelling that water was coming up from the shower. Then it started coming in from outside the house. Eventually the family was forced to climb on top of their kitchen cabinets — […]
23 hours ago

Sponsored Articles

Anacortes Christmas Tree...

Come one, come all! Food, Drink, and Coastal Christmas – Anacortes has it all!

Come celebrate Anacortes’ 11th annual Bier on the Pier! Bier on the Pier takes place on October 7th and 8th and features local ciders, food trucks and live music - not to mention the beautiful views of the Guemes Channel and backdrop of downtown Anacortes.
Swedish Cyberknife Treatment...

The revolutionary treatment of Swedish CyberKnife provides better quality of life for majority of patients

There are a wide variety of treatments options available for men with prostate cancer. One of the most technologically advanced treatment options in the Pacific Northwest is Stereotactic Body Radiation Therapy using the CyberKnife platform at Swedish Medical Center.
Work at Zum Services...

Seattle Public Schools announces three-year contract with Zum

Seattle Public Schools just announced a three-year contract with a brand-new company to the Pacific Northwest to assist with their student transportation: Zum.
Swedish Cyberknife 900x506...

June is Men’s Health Month: Here’s Why It’s Important To Speak About Your Health

According to the Centers for Disease Control and Prevention, men in the United States, on average, die five years earlier than women.
...

Anacortes – A Must Visit Summertime Destination

While Anacortes is certainly on the way to the San Juan Islands (SJI), it is not just a destination to get to the ferry… Anacortes is a destination in and of itself!
...

Ready for your 2022 Alaskan Adventure with Celebrity Cruises?

Celebrity Cruises SPONSORED — A round-trip Alaska cruise from Seattle is an amazing treat for you and a loved one. Not only are you able to see and explore some of the most incredible and visually appealing natural sights on the planet, but you’re also able to relax and re-energize while aboard a luxury cruise […]
Small businesses feel the pinch from slowing housing market