Lack of financing hinders home improvements

Smaller-scale projects maintain prevalence

After signs of increased home improvement activity this past spring surfaced, local contractors were optimistic that business was starting to look up.

Unfortunately, that hasn’t been exactly the case: While work involving small repairs and projects remains steady, bigger projects are few and far between.

Local construction companies continue to reel from the effects of the poor economy, with fewer workers taking on small-scale projects that just a few years ago were unheard of for construction companies, as was accepting credit cards.

“At the beginning of the year, there was a decent amount of work coming in, but right now, it’s been much slower,” said Father and Son Construction President Mat Vivona Jr., adding that such energy-efficient projects as replacement doors and windows, and blown-in insulation remain steady.

“Right now, it’s based on needs — the roof, porch and concrete repairs, door replacements. In many cases, it’s not even maintenance, it’s repairing what’s broken,” said Frank DiStefano of Allstate Construction.

“As far as handyman work, there’s plenty of that out there right now, but it’s difficult for us companies to do gutters or fix steps when we’re up against tradesmen who charge just enough to make a living,” said Norm Bartoletti of Allstate Construction.

While hiring a tradesman may be initially cheaper, consumers need to be wary of scam artists and double-check the qualifications of the person they hire — make sure they are licensed and insured.

“One trick a lot of scam artists are doing right now is providing false certificates of insurance: If asked if they’re insured, in many cases, they’ll white-out numbers and fill them in to make copies. It’s really important to ask for a copy of the insurance certificate and contact the insurance company directly to see if their policy is up to date,” Vivona advised.

Other ways to ensure a contractor is reputable, Bartoletti said, are to “make sure they have an office and check with the state to see if they are licensed and insured, and find out how long they’ve been in business and whether that business is being run under the same name and ownership.”

These precautions make it easier to track down the worker if something goes wrong with the repair or it’s not completed and help ensure the contractor is reputable, Bartoletti said, as some companies go out of business and open under new names due to various illicit reasons.

“One homeowner in Royal Oak made a really good point; she said nearly everyone she knows has a story that involves getting taken by people coming to their door offering their services — the job doesn’t get done or they end up having problems with the work,” said Vivona, whose company is often called in to fix those problems.

That’s why it’s essential for those still in the market for home improvements — and they do still exist, DiStefano and Vivona said, they are just saving up cash before going forward with such projects as bathroom renovations — to make sure they are working with a reputable company that will ensure they get what they pay for.

Money, or more specifically, the lack thereof, is the main reason for the continued lull in home improvements: Many homeowners are stuck in a Catch-22 when it comes to making needed large-scale home repairs, let alone improvements.

The main problem, said Bartoletti, is financing. Not only is there still a lack of financing available, but there’s also a lack of home equity to draw from due to upside-down home values, making it difficult, if not impossible, to get financing for necessary home improvements.

“Financing is still really difficult to get because the banks are still just holding onto the money — that’s the problem across the board,” Vivona said.

“In the past, getting credit was like turning on the tap: Anybody that had a job — and they didn’t even have to have good credit — could just tap into their home equity for home repairs,” said Bartoletti, noting that many home homeowners had almost instant equity and could easily get financing approval within 48 hours, sometimes within 24.

Today, however, most people have negative equity, and even if they have perfect credit, they can’t get financing, said Bartoletti. “That’s the dilemma we’re in — there’s no money for the typical homeowners to make repairs.” 

While there are myriad municipal, state or federal home improvement programs — American Recovery and Reinvestment Act of 2009 tax credits for energy-efficient improvements, the FHA 203k home improvement loans, the Michigan State Housing Development Authority Property Improvement Program and local Community Development Block Grant home improvement programs, among others — the contractors all said they have yet to see customers utilizing these programs, which can be difficult and time-consuming to get approval for, are typically bid out to multiple companies, and in some cases, the money, such as MSHDA and CDGB funds, has already dried up this year.

When asked what the solution to the current lack of funds affecting the housing and construction markets, and in turn the economy, is the contractors all agreed the No. 1 answer is jobs, good paying jobs, followed by an increase in available financing and supporting local companies.

“What it boils down to is, what people really need to start doing is buying local, buying American and supporting our local companies and manufacturers. … We can’t just be a nation of consumers; we have to delve deep and find locally made products. It takes some searching, but in the end, it’s worth it,” Vivona ardently asserted.

For more information about Allstate Construction, call (248) 528-2460 or visit www.allstateconstruction.net. To contact Father and Son Construction, call (800) 380-8888 or visit www.father-son-const.com.