We all know costs across our lives are increasing, everything from a loaf of bread to a car. The housing industry wasn’t spared, both home and remodeling prices have increased. With costs high, is it the right time to remodel? We obviously can’t make your decision for you but want to provide you with information that we’ve been seeing in the industry.
First of all, commodity values were sent on a roller coaster ride in the spring of 2020. While some have dipped a bit, they’re all steadily increasing. These prices have directly impacted our prices. Lumber and plywood are obvious. Summer of 2021 lumber prices were the highest they’ve ever been. These commodity prices have impacted materials across the board. Kristen Mosier shared a great article on bobvila.com “10 Inflation Price Hikes That Will Increase the Cost of Your Home Projects This Year”.
Producer Price Index Commodity Values, Not Seasonally Adjusted. Adapted from “LABOR AND MATERIALS MIGHT CONSTRAIN REMODELING GROWTH, BUT THE PANDEMIC IS ONLY PART OF THE STORY” by C. Martín, Monday, January 24, 2022, JCHS, Retrieved June 13, 2022, from https://www.jchs.harvard.edu/blog/labor-and-materials-might-constrain-remodeling-growth-pandemic-only-part-story
Product Price & Availability
As mentioned above the commodity price increases have driven up nearly every product, we use including quartz, windows, cabinets, tile, fixtures, hardwoods, and even paint! Supply chain issues continue to hinder nearly every project and continue to drive these price escalations. Many of our suppliers have let us know pricing will continue to increase regularly for the foreseeable future. According to Associated Builders and Contractors Chief Economist Anirban Basu input prices for construction have risen 24.4% year over year.
In addition to price increases availability is a concern as well. There are shortages in appliances, tiles, plumbing supplies, electrical supplies, and the list goes on. Our team is equipped to work with you to find sources that will fit within your construction timeline but these material shortages have caused delays across the industry. We’ve all seen the kitchen waiting for its range or fridge.
Trade Partner Pricing
As you can imagine the price of everything else going up has increased labor costs. The trade industry has had a labor shortage for years and the Great Resignation hasn’t done it any favors. In order to keep talent and provide them a decent wage, all our trade partners have increased their prices. They also are experiencing their own product price increases in materials.
2022 Remodeling Demand
Since 2020 demand for remodeling has rapidly increased. People were forced to be in their homes and were spending less on dining out, vacation, and other entertainment. Many people decided to focus on home projects creating a remodeling boom. Most reports on home remodeling demand suggest there will continue to be a strong push for remodeling till late 2022 but that could start cooling towards the end of the year. “The rising costs of labor and construction materials, difficulty retaining contractors, and climbing interest rates could discourage owners from undertaking new or larger remodeling projects,” says Abe Will, Associate Project Director of the Remodeling Futures Program.
Producer Price Index Commodity Values, Not Seasonally Adjusted. Adapted from “RED HOT REMODELING GROWTH EXPECTED TO EASE INTO 2023” by C. Martín, April, 22, 2022, JCHS, Retrieved June 14, 2022, from https://www.jchs.harvard.edu/blog/labor-and-materials-might-constrain-remodeling-growth-pandemic-only-part-story
Will prices drop?
Experts don’t know when or if prices will decrease or even plateau soon. Some prices may not decrease, once wages have increased you don’t generally lower them. Those new costs are all now the new costs for those businesses. So, while commodity prices may drop and we may see a dip in some pricing we fear some of these new costs are here to stay.
Choosing the right remodeler is more important now than ever!
We wish we worked in an industry where everyone stuck to their word and correctly represented their quality of work but that isn’t always the case. As we’ve seen in the past when there is a surplus in demand for remodeling many people decide to jump into the business. Make sure when you are looking for a contractor, you’re asking the right questions.
- Are they licensed and insured?
- How long have you been in business?
- Have you completed a project with similar scope?
- Do you offer a warranty?
- Do you have references?
- Does this price include actual bids from your subs and suppliers or is it an estimate with allowances?
Get the right price upfront
Getting a complete bid on remodeling costs protects you from budget busters and increasing costs. Many contractors will provide you with an estimate which literally estimates the costs of different suppliers and materials with allowances. While this method has always proved a bit of a budget concern in 2022 it’s a glaring problem. A trade partner’s costs may have gone up drastically but your contractor didn’t allow for this in their initial bid and they pass those costs on to you.
Schloegel’s process is a bit different and will provide you with the correct number right away. Once you sign a design contract, we work closely with you to design your project including floor plans. From there we have a Trade Partner walkthrough and ask all the partners for your project to provide accurate bids. These bids are very detailed, down to the number of lights installed.
From there, our design team helps you make ALL your design selections including counters, tile, cabinets, and plumbing fixtures. We take all this information and put together a final cost for you. So, unless you make some big changes mid-construction that number is what your final amount will be. We admit, more now than ever that number can have a bit of sticker shock but it’s better to know the bottom dollar up front rather than be surprised with a much larger number in the end. Learn more about our process.
Hopefully, some of this information will prove helpful if you’re thinking about a remodel. Contact Us if you’d like to speak with a Schloegel expert.