A growing number of Bay Area homeowners are starting long-delayed improvement projects, boosting business for the remodeling industry -- one of the hardest hit by the housing crash -- and signaling renewed confidence in the economic recovery.
The increase is spurred by an uptick in home equity loans, with the money being used for basic projects rather than elaborate overhauls, according to banks and remodeling contractors.
Remodeling projects are keeping contractors busy in upscale communities like Alamo, Orinda, Walnut Creek, Palo Alto and Cupertino, and in some middle-income communities where houses have regained equity lost during the housing bust.
"There's a lot of pent-up demand," said Orinda architect Rick Kattenberg. "It's busier than it's been in years. We're all grateful for it."
Fremont contractor Dean Henninger supervised a concrete pour in Livermore for a client's pool house this week, one of several jobs his company is working on. "I'm getting a lot of business," he said.
The remodeling business has been recovering since late 2012 as more homes return to positive equity. Slow housing sales had been a drag on the business because many remodeling jobs are sparked by home purchases.
Still, home equity lending -- a source of money for home improvements -- has made steady gains in the Bay Area for the past two years, according to an analysis for this paper by the real estate information company DataQuick.
The loans are clustered "wherever home values held up the best," said Andrew LePage of DataQuick.
The first three months of this year saw the most home equity loans for a first quarter since 2008 in the East Bay, Peninsula and South Bay, according to DataQuick. There's still a long climb back to pre-bubble days, but home equity lending in the first quarter of 2014 was up 25.4 percent from the first quarter of 2013, DataQuick reported.
Santa Clara County was the leader in the number of loans, followed by Alameda, Contra Costa and San Mateo counties. The total volume for the four counties was slightly more than $1 billion, up 29.7 percent from the first quarter of 2013. Of the four counties, Contra Costa had the biggest increase -- 43.6 percent from a year earlier.
According to the National Association of Home Builders, homeowners in Manhattan and two Bay Area ZIP codes, Atherton and a cluster of homes around the Diablo Country Club in the East Bay, spent more per home on improvement projects than any other ZIP code in the country. A 2014 association forecast sees those communities as the top remodeling spenders per home in California this year.
Contractors say small jobs and long-delayed, needed work are most common.
"We're doing mostly kitchens and bathrooms at the moment," said Robert Gamble of R&R Development in San Jose, who has jobs underway in San Jose, Cupertino and Menlo Park.
"Most of the jobs aren't terribly big at this point," said Alamo contractor Howard Robbins. "It's more like pent-up needs, like bathrooms that definitely need work and they have been holding off."
Wells Fargo and Bank of America say they're making more home equity loans, mostly for home improvement projects. Applications for home equity lines of credit are up 75 percent at the Bank of America from the same time last year in the Bay Area, said Allen Seelenbinder, the bank's regional sales executive.
Seelenbinder said the increase in home equity loans in the first quarter of this year over the first quarter of last year largely came from Silicon Valley homeowners.
Kelly Kockos, Wells Fargo senior vice president for home equity, said rising home prices and a low inventory of homes for sale have people staying put and remodeling rather than selling and moving up to a bigger home.
"When prices get inflated due to the inventory issue it becomes more expensive to move and you may not get a trade-up house," she said.
In contrast to the go-go days before the housing crash, the borrowing for needed projects is for "something you need, not what you want anymore. It's less frivolous, more meaningful," she said.
Cupertino contractor William Fry said that three jobs he's working on now are being financed with bank loans, but that Silicon Valley homeowners often have the cash on hand to pay for the job.
"We're getting calls every single day," he said. "I have to turn the work away. We're swamped."
Whatever the financing method, the pace of remodeling is expected to quicken this summer.
"There's simply an increasing confidence that the recession is over and things are going to get better," said Keith Alward of Alward Construction in Berkeley.
Contact Pete Carey at 408-920-5419 Follow him on Twitter.com/petecarey