Dreams of that new kitchen or second-story addition could be delayed for many homeowners and homebuyers in Seattle.
This year, the number of remodel permit applications is trending toward a five-year high, stoking demand for skilled labor that’s already in short supply.
Buyers who are forced to take what they can get in the housing market have then found themselves in bidding wars for tradeworkers. Jason Legat, founder and president of Seattle-based Model Remodel, said in the past year his company has heard from 600 new leads, up from just 230 the year before, and it’s on track to reach 800 this year.
“We’re trying to hold the reins on growth,” Legat said. “There’s more work than there are people to do the work.”
Given the competition, contractors in Seattle can easily earn up to $90 an hour and specialty trades command upwards of $150 an hour, Legat said. Federal labor data shows construction managers earn an annual wage of about $142,000 in the Seattle-Bellevue-Everett region.
Model Remodel’s projects range from $125,000 to $150,000 for kitchen overhauls or basement renovations. Second-story additions or accessory dwelling units, such as backyard cottages, can cost more than $400,000, he said.
The Business Journal analyzed more than 17,000 addition and alteration permits across Seattle and found remodel activity has been on an upswing since at least 2013. The number of permit applications increased 31 percent from 2013 to 2017, and is on track to increase another 11 percent this year.
Homeowners and contractors filed applications for 1,520 permits for home remodels through May 1 this year, according to public records. The number of permits approved increased about 35 percent from 2013 to 2017.
Through May, the city had a 94 percent approval rating, green-lighting 1,422 remodel permits.
These permits include house additions or remodels, such as an extension or a modification, including second-story additions, dormers, footprint expansions, interior reconfigurations or house lifts. Permits aren’t required to paint a house, repoint a chimney or replace roofing and siding if no structural changes are made. Projects with a value of less than $6,000 are often not included.
More remodel activity is going on in the Ravenna and Wedgwood neighborhoods — ZIP code 98115 — than any other neighborhood in Seattle every year going back to at least 2013, according to the city’s permits for this type of project.
Over the five-year period, that area had more than 1,600 permit applications approved for remodel work. In 2017, the average value of the work was about $84,500 and reached as high as $450,000, according to public records.
In the 98177 ZIP code, which includes Broadview north up to Richmond Beach, 67 remodel permits were approved in 2017, up 76 percent from 2013. The average net worth in that area is $1.86 million.
Sabrina Booth, a Windermere real estate broker based in Seattle, works with average sellers and professional flippers on buying and selling homes in Seattle.
“I remember my parents telling me to buy the worst house in the neighborhood, and that you should fix it up and do the sweat equity,” Booth said. “To get a house that’s in really poor condition, most people have to pay straight cash.”
But most first-time homebuyers don’t have $400,000 cash, she said. Plus, they’re competing with market-savvy investors.
She advises clients not to embark on large renovation projects, but smaller updates: painting in neutrals, updating lighting and plumbing fixtures or adding new mulch to a flowerbed.
“For the average home seller, don’t spend a ton of money. Don’t put in a brand-new kitchen or a brand-new bathroom because you won’t see a return on investment in that short of time,” Booth said. “… It’s still worth putting some time and effort and money into getting your house to look its best, but it will sell in whatever condition.”
At Model Remodel, Legat has noticed the change in clients.
“In the past, people would hire us to get the house ready for market,” Legat said. “A lot of clients now are getting the houses ready for themselves so they can enjoy living in it.”
He isn’t expecting things to slow down anytime soon. In one year, the price of a basement remodel increased by $50,000. The lack of skilled labor and the demand for service puts companies like his in a premium position.
“I think we’re going to continue — maybe not at this pace — but I don’t see it slowing down unless there’s some big catastrophe,” Legat said. “Seattle’s been discovered.”