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Tuesday, May 11, 2010

Consumer Corner: Recession Changed Consumer Remodeling Approach

UPI International

The recession has changed the consumer's approach to remodeling and appliance shopping as well as how to pay for those improvements, says Mark Karas, president of the National Kitchen and Bath Association.

"Any remodel now is budget-driven," Karas said. "You really have to take a look at what the client is looking at overall.

"I just sold a kitchen to a relative. We'd been trying to plan for five or six years. Just before the holidays, first the oven went, then the microwave, then the dishwasher -- those were the signals."

With the real estate market still in turmoil, Karas said, consumers are taking a more careful approach. He said emphasis is still on kitchen and bath remodeling ("You always get your money back no matter what you spend on a kitchen or bathroom remodel in Pennsylvania") but now, in addition to pricing fixtures and contractors, consumers are pricing the home equity loans they're using to finance them, with some banks offering financing as low as 3.9 percent.

"The rich are always going to be rich so can they do (a remodeling job) out of pocket, maybe. Middle-class homeowners are more likely to go to home equity loans," said Karas, who also is the general manager of Adams Kitchens in Stoneham, Mass.

"It's funny. A very good friend of mine is a banker. He just told me people used to come in and they would be told the rate is X and they would go for the loan. Now people are shopping for home equity loans just like they shop for a car. Even bank loyalty is gone.

"Interestingly, we're in a totally different mindset when it comes to money, projects and buying. Everybody just takes a totally different approach today."

At the recent Kitchen remodeling Pennsylvannia and Bath Industry Show in Chicago, Karas said the feeling was the economy is coming back, but coming back slowly. Nonetheless, there's a cautious optimism out there, he said.

As for trends at the show, there was much more emphasis on Energy Star appliances.

"More people are trying to get their products out there," he said. "Everybody has Energy Star in their lines but not everything is Energy Star. The emphasis now is on looking good, working great and still being Energy Star efficient."

For example, General Electric introduced its new Hybrid Water Heater, which is billed to cut residential energy usage by more than half. The unit "talks" to the utility grid, powering down or delaying operations during peak periods when prices are highest. GE plans to expand the technology to refrigerators, microwaves and roaster ovens.

Another emerging trend, Karas said, is greater use of LED lighting, both in kitchen appliances and for general use. He acknowledged the bulbs are much more expensive than incandescent or compact fluorescents, but they last 20 years and produce no heat. Karas estimates the reduced energy costs pay for the bulbs in three to five years.

"I'm converting my own showroom to LED. ... The basic cost is 20 percent higher," he said. "I just replaced xenon bulbs … which were putting out 150 watts; the LED is putting out 30."

He said you get the same amount of light from a 75-watt hallogen bulb that you get from a 22-watt compact fluorescent and a 16-watt LED. And LEDs have the added advantage of not having the environmental concerns associated with compact fluorescents.