Portland Not Immune to Remodeling Market Slump

After resisting the housing crash, Portland felt the impact in 2008, as sales, prices and remodeling activity slowed.

February 28, 2009
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Since peaking in 2005, existing home sales in Portland have dropped precipitously, leading to a slowdown in remodeling activity as well.

In the early days of the housing crash, Portland, Ore., was one of those cities like Seattle and Charlotte, N.C. that resisted the national trend.

2008 was the year that all came grinding to a halt. Existing home sales plunged, home prices dropped for the first time and remodeling activity quickly dried up.

“Portland came to this party late, but now we're getting hit pretty hard,” says Tom Kelly, president of Neil Kelly, the largest remodeling company in Portland.

While the market was slowing, it wasn't until the implosions of the stock and credit markets last fall that things really got bad, Kelly says.

Neil Kelly's prime client is the high-end homeowner. With the losses many of them took in the market last fall and the current uncertainty, a lot of homeowners are reluctant to invest in their homes.

“I've managed through four recessions, and they all have different characteristics,” he says. “This one, the fear on the part of people with wealth is like a new dimension I've not seen before.”

Those who are choosing to remodel are undertaking smaller projects and are much more budget conscious than in the past. Instead of additions, many clients are opting for smaller interior remodels.

One positive for the company has been it's focus on green, which Kelly believes has helped the company weather the downturn better than others.

“Portland's been pretty far ahead of the pack on green,” he says. “For those contractors that have taken that on, and we have for years, that's proven to be a business bonus.”

January was the best month ever for the company's home performance division, and Kelly says the green incentives that look to be part of the stimulus package should help increase interest as well.

Specialty Installed volume
Neil Kelly Design/build remodeler $25,488,031
A Cut Above Exteriors & Construction Exterior remodeler $14,118,051
Metke Remodeling & Woodworking Full service remodeler $4,633,024
Olson & Jones Construction Full service remodeler $3,400,000
Master Plan Remodeling Full service remodeler $2,600,000

The 2009 Market Leaders list will appear in the October issue. For more information on the Market Leaders, visit www.proremodeler.com.

 

Market Update

Some of the key figures from Portland show that the Pacific Northwest is no longer resisting the national downturn.

Metro Area Population: 2,175,113 (12.8 percent increase since 2000)
Change in home values: Down 2.64 percent since 2007; up 55.4 percent over last five years
Existing home sales: 2008 sales were down 32 percent from 2007 and 49 percent from 2005 market peak
Median household income: $40,285
Unemployment rate: 8.1 percent (up from 4.8 percent in 2007)

Sources: U.S. Bureau of Labor Statistics, U.S. Census Bureau, Office of Federal Housing Enterprise Oversight, Regional Multiple Listing Service

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