Contractors come cheap in a deflated housing market on clarkhoward.com

Thinking about doing a home renovation? There's never been a better time to hire a contractor.

During the peak of the housing market, contractors had a certain disregard for the customer simply because they were swamped with jobs. Very often, they would say they'd show up at a certain time and then never materialize. Now that coin has flipped.

The old rule of thumb about expecting a job to run twice as long and cost twice as much as initially quoted is out the window. Today, your job is likely to finish on or before schedule because all the subs that a contractor might use are available and waiting for work.

Clark's wife recently had a small-to-moderate home improvement done, and the contractor wanted to start the very next day after she called to offer him the job! The whole job would have taken two months in the past. Now it was done in a little more than two weeks.

Economies go in cycles, and the housing market went from being turbo-overheated to being frozen in the tundra. That means materials come cheaper, labor comes cheaper and the quality of workmanship is better because people are hungry for work.

Ironically, those who can afford to do renovations are not doing them because there's so little payback. For every renovation dollar you spend, you're lucky if you get 50 cents back in resale value. But that misses the point of a renovation; you do it because it will improve your quality of life at home, not because you're expecting return on investment.

What others are saying

Why renovate in a down market?
I agree, that in a down market, you renovate to improve your quality of life. If you improve the property, and you do not recoup the costs, it might be because you neglected the single most important part of the house that affects the price the most, and that cannot be changed through any kind of renovation: location, location, location.
By Mare @ 11/15/09 08:44:29 PMreport abuse
Re: why renovate? in a down market
Why renovate in a down market??? Because con artist cable networks like Homes and Garden TV tell you that home renovations always bring bigger bucks at sale time and that any fool can do it and win. Along with the get rich quick real estate plans, Home and Garden TV has contributed to the lie about the real estate market being a piggy bank rather than a place to call home and live. To me, make a renovation ONLY WHEN IT IMPROVES YOUR OWN QUALITY OF LIFE -- NOT to sell it for a quick killing. Ignore Home and Garden TV!!!!!
By Garu @ 11/13/09 01:41:43 PMreport abuse
Contractors come cheap
The market does not allow for costs to be reduced unless you cut corners. Perhaps the discount contractor does not pay taxes, or maybe Mr. discount is not paying the Workers comp and General liability premiums. Let us not forget about payroll taxes. All of thees costs are fixed and unfortunatly they do not go on sale during recessions. By chosing a contractor without proper license and insurance you willing accept the exposure of any possible harm to of every individual the steps onto your property currently or for any future claims. Any General contractor worth his salt will also have quality sub contractors that will be properly licensed and insured also. Hiring illegals is against the law. A contractor willing to break the law with the federal goverment surely would not find it hard to cut corners on your project. Materials prices have come down slightly as they are commodity items - IE wood & metal materials.

I do agree the with less work there are more contractors able to see clients in a shorter period of time. This is great for the client that needs work done immeadiately. As with anything a little planning and research go a long way.
By John @ 11/11/09 04:32:00 AMreport abuse
2 cents
I know it seems like a lifetime ago, but 20 years ago almost all residential construction was done by US citizens. In Minnesota the residential construction is still being done by US citizens because the remote proximity to the Mexican border and the higher quality of construction required (otherwise you would freeze to death). So, yes I do believe if the jobs are available US citizens will most definitely take them. There are many who will not. I have seen the computer industry go through the same boom to bust and the same type of complaints from those who were overpaid and then suddenly unemployed with huge debts as they ratcheted up their lifestyle.

Unfortunately, many contractors over the past 10 years are people who decided they would outsource their manual labor job to Hispanic workers who are not here legally, do not have any health benefits or workers comp, will work under illegal and dangerous conditions, and are not insured under a GL policy. During the boom, the sub-contractor became a "manager" and the easy money rolled in as the "manager" just farmed out work to illegals. Times have changed but these new managers are still struggling with that change. Many would rather refuse to work than lower their price or go back to doing manual labor. I have seen them. It is amazing. But, after another year many will be forced to face the grim reality of their situation, swallow their pride and go back to work at what the market prices demand doing any work they can possible get. I don't think we are there yet as I recently went through 16 roofers before I found one that was willing to do a repair without completely ripping me off. One roofer even wanted $170 just to look at my roof. Apparently, roofers are not hurting enough yet. And in the end, 6 Hispanics came to my house, unsupervised as I had to get on the roof and show them what needed to be done. Amazing.
By Ben @ 11/10/09 01:57:32 PMreport abuse
Americans picking up the slack? Please!
If all the illegal aliens went home, do you seriously believe Americans would do those jobs? I personally knew illegals getting paid fairly well (on an hourly basis, anyway) because there weren't even enough of them drive down the cost of labor during the construction boom. No, I'm not an illegal alien and yes, I've done several temporary contracting/construction work along side illegal aliens. The work was pretty grueling, which is why suspect I was one of the very few white people on the job. Americans just don't want to do hard labor, clean toilets, or wash dishes in restaurants!
By Medical Student @ 11/10/09 12:15:19 PMreport abuse
wow, I agree with Buzz
without the partisan comments on which party likes illegals, I agree with buzz, which is rare. The quality of workmanship is in the toilet, most of these illegals never saw a hammer or paint brush in their country. When you employ a company that uses them for labor you are endorsing slave labor pricing so the fat american contractor can make a profit being middleman and never lifting a tool...you see these guys when they bid the job, and then when they pick up the check. while the work is being done its nothing but spanish and trumpet music...these guys do a half-ass job, if they fall off your roof they just disappear instead of making the contractors phony workers comp names file a claim, and they are scared they will be deported if they make a fuss. They live 10 to an apartment and send their money back home, never paying taxes, and using the free health care they can get it. But until people say I want american workers doing quality construction, all your going to get is lazy contractors making a fat check off of underpaid, underskilled, illegal workers. But like someone said , you get what ya pay for!
I say unless they are here on work visas then they are criminals and should be punished...how bout we send them to guam or some other far away island and drop them off, if they are caught here....let them try and swim back.
By Dave @ 11/10/09 11:37:44 AMreport abuse
Re: why renovate? in a down market
Wow talk about taking a haircut, my only question: is this your primary residence or an investment? As a first time home buyer it stinks having to pick over all the flips to find a plain jane home. Pleas stop flipping
By Henry @ 11/10/09 11:15:05 AMreport abuse
Illegal Aliens
Many illegal aliens have gone home, but there are still about 10 million illegals in the US. The Democrats want them to be made legal because new immigrants vote Democratic party about 4 to 1. Too many Republicans protect them because they are getting nice checks from growers, builders and chicken processors who are getting rich on the cheap labor. It is time for the people to rise up and throw out all the politicians who do not get serious about these illegal aliens. If we sent them home, all the jobs would be picked up by unemployed Americans. Yes, maybe we would have to pay a little more for a bucket of chicken or a new roof, but I am more than willing to pay it. How about you?
By Buzz G @ 11/09/09 08:14:45 PMreport abuse
supply and demand
to ronda: I bet when times were go-go, your company like every other contractor out there increased your markup (i.e. profit). So now when times are nogo-nogo, you have to markup less. Simple supply and demand. You can whine all you want about it not being fair, and I doubt you whined when you had fatter profits a few years back simply because of the same supply-demand situation.

I have found over the years that in tough times, small contractors with owner operators will almost work for wages. That is how low things can go.
By brian @ 11/09/09 07:12:01 PMreport abuse
Contractors still have to eat
Being the wife and co owner of a remodeling company I'm here to tell you we still have to eat. Why should we have to lower our prices or get beat down by homewowners because of the economy? We still have bills, food and families to provide for. We can't do it anymore one less money than anyone else and we shouldn't have to. You get what you pay for is still holding true in most areas.
By Ronda @ 11/09/09 07:04:04 PMreport abuse
why renovate? in a down market
Quick math. Bought the house 2 years ago at $85K in a historic area (mixed quality market). Put $20K cash in upgrades, i.e. central heat/air, new appliances, insulation, etc. Appraised last week at $33K. I'm angry.
By Deanna @ 11/09/09 04:02:27 PMreport abuse

Why renovate in a down market?

I agree, that in a down market, you renovate to improve your quality of life. If you improve the property, and you do not recoup the costs, it might be because you neglected the single most important part of the house that affects the price the most, and that cannot be changed through any kind of renovation: location, location, location.

By Mare @ 11/15/09 08:44:29 PMreport abuse

Re: why renovate? in a down market

Why renovate in a down market??? Because con artist cable networks like Homes and Garden TV tell you that home renovations always bring bigger bucks at sale time and that any fool can do it and win. Along with the get rich quick real estate plans, Home and Garden TV has contributed to the lie about the real estate market being a piggy bank rather than a place to call home and live. To me, make a renovation ONLY WHEN IT IMPROVES YOUR OWN QUALITY OF LIFE -- NOT to sell it for a quick killing. Ignore Home and Garden TV!!!!!

By Garu @ 11/13/09 01:41:43 PMreport abuse

Contractors come cheap

The market does not allow for costs to be reduced unless you cut corners. Perhaps the discount contractor does not pay taxes, or maybe Mr. discount is not paying the Workers comp and General liability premiums. Let us not forget about payroll taxes. All of thees costs are fixed and unfortunatly they do not go on sale during recessions. By chosing a contractor without proper license and insurance you willing accept the exposure of any possible harm to of every individual the steps onto your property currently or for any future claims. Any General contractor worth his salt will also have quality sub contractors that will be properly licensed and insured also. Hiring illegals is against the law. A contractor willing to break the law with the federal goverment surely would not find it hard to cut corners on your project. Materials prices have come down slightly as they are commodity items - IE wood & metal materials.

I do agree the with less work there are more contractors able to see clients in a shorter period of time. This is great for the client that needs work done immeadiately. As with anything a little planning and research go a long way.

By John @ 11/11/09 04:32:00 AMreport abuse

2 cents

I know it seems like a lifetime ago, but 20 years ago almost all residential construction was done by US citizens. In Minnesota the residential construction is still being done by US citizens because the remote proximity to the Mexican border and the higher quality of construction required (otherwise you would freeze to death). So, yes I do believe if the jobs are available US citizens will most definitely take them. There are many who will not. I have seen the computer industry go through the same boom to bust and the same type of complaints from those who were overpaid and then suddenly unemployed with huge debts as they ratcheted up their lifestyle.

Unfortunately, many contractors over the past 10 years are people who decided they would outsource their manual labor job to Hispanic workers who are not here legally, do not have any health benefits or workers comp, will work under illegal and dangerous conditions, and are not insured under a GL policy. During the boom, the sub-contractor became a "manager" and the easy money rolled in as the "manager" just farmed out work to illegals. Times have changed but these new managers are still struggling with that change. Many would rather refuse to work than lower their price or go back to doing manual labor. I have seen them. It is amazing. But, after another year many will be forced to face the grim reality of their situation, swallow their pride and go back to work at what the market prices demand doing any work they can possible get. I don't think we are there yet as I recently went through 16 roofers before I found one that was willing to do a repair without completely ripping me off. One roofer even wanted $170 just to look at my roof. Apparently, roofers are not hurting enough yet. And in the end, 6 Hispanics came to my house, unsupervised as I had to get on the roof and show them what needed to be done. Amazing.

By Ben @ 11/10/09 01:57:32 PMreport abuse

Americans picking up the slack? Please!

If all the illegal aliens went home, do you seriously believe Americans would do those jobs? I personally knew illegals getting paid fairly well (on an hourly basis, anyway) because there weren't even enough of them drive down the cost of labor during the construction boom. No, I'm not an illegal alien and yes, I've done several temporary contracting/construction work along side illegal aliens. The work was pretty grueling, which is why suspect I was one of the very few white people on the job. Americans just don't want to do hard labor, clean toilets, or wash dishes in restaurants!

By Medical Student @ 11/10/09 12:15:19 PMreport abuse

wow, I agree with Buzz

without the partisan comments on which party likes illegals, I agree with buzz, which is rare. The quality of workmanship is in the toilet, most of these illegals never saw a hammer or paint brush in their country. When you employ a company that uses them for labor you are endorsing slave labor pricing so the fat american contractor can make a profit being middleman and never lifting a tool...you see these guys when they bid the job, and then when they pick up the check. while the work is being done its nothing but spanish and trumpet music...these guys do a half-ass job, if they fall off your roof they just disappear instead of making the contractors phony workers comp names file a claim, and they are scared they will be deported if they make a fuss. They live 10 to an apartment and send their money back home, never paying taxes, and using the free health care they can get it. But until people say I want american workers doing quality construction, all your going to get is lazy contractors making a fat check off of underpaid, underskilled, illegal workers. But like someone said , you get what ya pay for!
I say unless they are here on work visas then they are criminals and should be punished...how bout we send them to guam or some other far away island and drop them off, if they are caught here....let them try and swim back.

By Dave @ 11/10/09 11:37:44 AMreport abuse

Wow talk about taking a haircut, my only question: is this your primary residence or an investment? As a first time home buyer it stinks having to pick over all the flips to find a plain jane home. Pleas stop flipping

By Henry @ 11/10/09 11:15:05 AMreport abuse

Illegal Aliens

Many illegal aliens have gone home, but there are still about 10 million illegals in the US. The Democrats want them to be made legal because new immigrants vote Democratic party about 4 to 1. Too many Republicans protect them because they are getting nice checks from growers, builders and chicken processors who are getting rich on the cheap labor. It is time for the people to rise up and throw out all the politicians who do not get serious about these illegal aliens. If we sent them home, all the jobs would be picked up by unemployed Americans. Yes, maybe we would have to pay a little more for a bucket of chicken or a new roof, but I am more than willing to pay it. How about you?

By Buzz G @ 11/09/09 08:14:45 PMreport abuse

supply and demand

to ronda: I bet when times were go-go, your company like every other contractor out there increased your markup (i.e. profit). So now when times are nogo-nogo, you have to markup less. Simple supply and demand. You can whine all you want about it not being fair, and I doubt you whined when you had fatter profits a few years back simply because of the same supply-demand situation.

I have found over the years that in tough times, small contractors with owner operators will almost work for wages. That is how low things can go.

By brian @ 11/09/09 07:12:01 PMreport abuse

Contractors still have to eat

Being the wife and co owner of a remodeling company I'm here to tell you we still have to eat. Why should we have to lower our prices or get beat down by homewowners because of the economy? We still have bills, food and families to provide for. We can't do it anymore one less money than anyone else and we shouldn't have to. You get what you pay for is still holding true in most areas.

By Ronda @ 11/09/09 07:04:04 PMreport abuse

why renovate? in a down market

Quick math. Bought the house 2 years ago at $85K in a historic area (mixed quality market). Put $20K cash in upgrades, i.e. central heat/air, new appliances, insulation, etc. Appraised last week at $33K. I'm angry.

By Deanna @ 11/09/09 04:02:27 PMreport abuse

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Nov 09, 2009 -- Contractors come cheap in a deflated housing market

What others are saying