Renovations take off in Twin Cities, amid tight housing supply, cheap capital

With one child in college and one in high school, Chris and Amy Wexler recently pondered downsizing from their house in Edina. But they quickly discovered that finding a different one wouldn't be easy or cheap.

So they decided to stay put and undertake a top-to-bottom renovation that will give their house a bigger kitchen, an open floor plan and new windows. "As long as we will be here for the foreseeable future," Amy Wexler said, "we wanted to make it the best for us."

Homeowners throughout the Twin Cities area are renovating houses at an unprecedented pace. This year, metro-area homeowners will complete a record 147,658 home improvement projects, according to an analysis of local building permit data by Metrostudy. Another study, by the Joint Center for Housing Studies at Harvard, found that spending on remodeling is expected to increase nearly 17 percent in the region this year.

Homeowners have seen the values of houses rebound since the housing crash a decade ago. Some are borrowing on that value to give their homes a new look. Others are making plans to stay in their houses longer, either because they want to age in place or they can't find a suitable replacement when listings are near an all-time low.

"Many homeowners don't want to leave their communities and therefore are opting to update," said Meg Jaeger, client relations manager for New Spaces, which has been expanding across the Twin Cities metro area.

Remodelers aren't so busy that they are turning away work, but it's taking longer to get on a remodeler's schedule, said Shawn Nelson, president of New Spaces. "People seem willing to wait to make sure they get a good remodeling contractor," he said.

When Celeste Hughes decided to give the multilevel house she has owned in Woodbury for several years an open-concept makeover, she was surprised at how long it took to find a company that was willing to do the work. Several companies responded to her initial query, but then they would drop the ball and not return her calls. "Some were bad on follow-through," she said.

Craig Plekkenpol, who founded Plekkenpol Builders of Bloomington in 1970, has been through many building cycles and has rebuilt his staff after a painful downsizing during the 2008-2009 recession. During the downturn, Plekkenpol said his clients were focused mostly on essential kitchen and bath projects. Today, he says his staffers are building more discretionary products like a decked-out addition and outdoor fireplace for a sprawling house in Bloomington.

"The recession is just a little farther back in the rearview mirror," Plekkenpol said. "So people are choosing more upgraded materials and appliances and fixtures."

At the end of last year, only 4.4 percent of all Minnesota homeowners had a mortgage that exceeded the value of their house, and on average homeowners had accumulated $10,000 in appreciation, according to a year-end report from CoreLogic.

That money is helping to fuel big sales at home improvement stores, lumberyards and other retailers that cater to homeowners. Baby boomers and other more mature homeowners are helping to drive those gains as they tackle projects aimed at helping them to stay in their homes as they age.

That was Robin and Mark Kellogg's goal when the recent empty nesters decided to simplify their lives and downsize from a big house in Lakeville to a townhouse in Plymouth that's about half the size, enabling them to live without stairs.

"Our kitchen is beautiful," Robin Kellogg said. "It is open and bright, it is colorful and joyful, and it is spacious. Though we didn't add square feet, it's just designed right now, and it is just begging for our first dinner party."

At their rambler in Edina, the Wexlers said they decided to increase their renovation budget, which was originally $70,000, because they were confident the investment would pay off down the road. They said they are committed to the house and neighborhood for the next several years. For the time being, they are living in a construction zone.