Remodel boom defies recession

  • Bryan Corliss / Herald Writer
  • Thursday, December 6, 2001 9:00pm
  • Business

By Bryan Corliss

Herald Writer

The recession is here, the layoffs are coming and yet for some reason, Rich Kvangnes can say business is "very good" at Judd &Black in Everett.

"I don’t have an answer for it," Kvangnes said. But last month, sales at the home appliance store he manages were up at least 10 percent over November 2000. "December has started off brisk also," he said.

Similarly, Hatloe’s Decorating Center also recorded "double-digit" sales increases last month over the same month last year, Steve Hatloe said. "There are some businesses that are doing that," he said, adding that he’s talked to other home-improvement stores that also are seeing sales increases this fall.

What’s causing this bump in the middle of a downturn?

Good question, said Carl Obermiller, an associate professor specializing in consumer behavior at Seattle University’s Albers School of Business. "I don’t have a facile answer."

But there are probably a couple factors, he and others said. Interest rates have fallen, spurring a round of mortgage refinancing that has put extra cash in the hands of homeowners. So did the federal income tax rebates most households received earlier this fall.

And in this post-Sept. 11 world — where everyone has espoused increased emphasis on home and family amid a world of uncertainty — what better way to spend that money than home improvements, asked Harriet Stephenson, the director of the entrepreneurship center at Seattle University.

"It’s somewhat, in a way for us, a security thing," she said. "I don’t have that much control over things, but this I can control. People feel better and you can see what you’ve done. There’s conceivably some of that going on."

An increase in spending on the home would reverse the trends set prior to the terrorist attacks.

Sales of building materials, including things such as paint and wallpaper, fell 4.5 percent in Snohomish County during April, May and June, compared with the same quarter last year, according to figures released this week by the Washington Department of Revenue. Taxable retail sales in this category fell from $95.1 million to $90.8 million, according to the report.

Sales of furniture, furnishings and equipment fell even more — 13.7 percent, the state reported, from $100.6 million in the second quarter of 2000 to $86.8 million.

Hatloe said there continues to be a noticeable drop in sales of new homes. That part of his business is "definitely down," he said.

But sales for remodeling are up. He thinks it’s a response to the Sept. 11 attacks.

"People are staying home. They’re nesting," Hatloe said. "Instead of flying to Florida or Europe, they’re staying home and re-doing the house."

Seattle U’s Stephenson also noted that people are spending more time at home and are more aware of things they’d like to change about the house.

Part of it, she added, could be simple pent-up demand.

Sept. 11 disrupted our normal spending habits, Stephenson said. We still have that urge to spend, but we’re being more careful, she speculated. Remodeling or redecorating a room is a good fit, she said. "You can certainly justify home improvements."

You can call Herald Writer Bryan Corliss at 425-339-3454

or send e-mail to corliss@heraldnet.com.

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