Walter Roderick
Walter Roderick

Before the death of the market in 2007-2008, most builders found themselves in one segment or the other. The lines were clearly drawn, and at that time the money was being made in new construction. Banks were easy on lending requirements and buyers were footloose and fancy free when it came to putting a cap on their housing budgets. In my neck of the woods (north Georgia) most of the residential construction being built focused on vacation cabins. Most of these cabins were in $200K-plus range with view lots and water lots easily topping $500K-plus. Profits were fat and there was little reason for a competent builder to consider the remodeling market.

Fast forward to 2015-16. New home construction is up quite a bit from its valley in 2010, but the financial scene has not improved at the same pace. Income growth has remained stagnant since 2005 while the cost of living has continued to increase. In fact, inflation has risen almost 22% since 2005 . Put the two together and it's easy to see that discretionary income has been reduced for many people.

So, while most folks may not have an extra $200,000 laying around to build a cabin, many have found that their money is better spent in these lean times by improving their existing residence and many builders are picking up on the trend. New construction will still yield a good profit for the long-time established builder, but for many in the trade, a good earning can be made in the smaller projects that customers with limited funds are pursuing. Updated kitchens are a hot item right now (http://www.improvenet.com/a/2016-kitchen-remodeling-trends) as well as storage systems and outdoor space improvements (http://imagineerremodeling.com/home-design-trends-and-industry-changers-in-2016/). Another popular home improvement is exterior door replacement and new flooring.

When the new construction market was hot, adding on to your home wasn't as glamorous as building a second home. As a result, the bulk of available money went into new construction which was easier to obtain due to the relaxed loan requirements of that time. But now people are seeing an increase in their existing home values, and with refinancing rates still reasonable, the home improvement project is high on the list again. New home builders who are feeling the pinch have been redirecting some of their efforts to the remodeling market and finding steady work and good profit.