Indeed San Jose, where Morello’s workload is idling, is among the more difficult markets because sales activity is so slow. Sales volume over the past 12 months plunged 61 percent, according to data compiled by Baker.

The return on investment for remodeling projects has declined over the past five years, according to data Baker cited from Remodeling Magazine and the National Association of Realtors. Just five years ago, during better times in the housing market, remodelers recouped about 82.5 percent of their projects’ expenses at resale, but by 2007 they only got 70 percent, according to the NAR/Remodeling data.

But there are bright spots around the country — markets where home prices continue to increase or maybe not decrease that much, Baker says. These include Portland, Seattle and many Texas cities where buying and selling activity are brisk or at least not suffering like markets in California, Florida and the Southwest.

Story continues below ↓

Making do in Midwest, Southwest
Even in stronger markets contractors are seeing a slowdown, but they say they’re still busy. In Milwaukee, for example, home sales volume is down about 7 percent. But for Dean Herriges, president of Milwaukee-area contractor Urban Herriges & Sons, the big projects that have vanished elsewhere keep on coming.

During boom times, when homes sold quickly, Herriges would encounter “ROI remodelers” — those seeking a return on investment who wanted to hire his company for projects that would make their home more marketable. With the market softer, clients are looking for projects to improve their quality of life instead.

“I haven’t had anyone ask me over the past six to eight months if they should remodel or relocate, vs. if they should remodel just to sell and profit,” he says.

Lonny Rutherford, president of Legacy Construction in Farmington, N.M., says his team is “holding our own” during a changed market, where his “gold-plated” clients with big budgets now struggle to get financing or hesitate to sign contracts.

While high-end jobs are fewer, he says, there are always clients who want “green” projects that can lower energy expenses. Seniors, too, are now hiring contractors to outfit their homes so they can age in place rather than move to a special facility, he says.

What does the remodeling slowdown mean for consumers? For those who can get financing and have a little equity, it means that the contractors once notorious for not returning phone calls now respond — and promptly.

“I don’t plan to leave the business,” says Morello. “This is what I do.”

Also in msnbc.com business
Ads of the Weird: Dentyne's human touch
Your Career: A bill that helps unions
Answer Desk: Lock up those CEO bums
Sports biz: Blackhawks really on a roll?
Video: Simple ways to save money