When prices soar, the root cause is an imbalance of supply and demand. In this case, the imbalance has its roots in several different places, many having to do with this topsy-turvy housing market that we’re living through. If you want to understand where this market’s going, it’s important to understand these factors first — so that’s what we’re going to do.
Once we’ve looked at the factors driving the cost up, we’ll also talk about how you can save money on your upcoming remodeling and home restoration projects. So, let’s get to it: The real story on why it costs so much to remodel a home right now.
1. The housing market is still red-hot.
An extremely constricted supply of housing has created the biggest seller’s market in recent memory. With homes frequently selling in less than a week and far above asking price, plenty of people are hoping to maximize the value of their homes in one way or another.
Some folks, seeing an opportunity to multiply their investment, are undertaking remodeling projects to try to add value to their home and appeal to buyers who really want a move-in ready home. For others, the current state of the housing market steered them into purchasing a fixer-upper or remaining in their current spot. All of these add up to one conclusion: a sharp increase in demand for remodeling services and supplies.
2. Building material prices are near all-time highs.
The construction market is in the middle of a historic shortage of building materials. Lumber prices have exploded so much that many contractors can’t start new projects because they can’t acquire the necessary framing materials at a reasonable price. But the problem reaches far beyond lumber. Builders are reporting shortages of everything from windows to appliances to copper wiring.
With construction companies taking on so many projects, it makes sense that demand for building supplies would be driving prices up. But there are other phenomena in play, too. For one, the boom in quarantine DIY projects sent thousands of folks to Home Depot for supplies. That, in turn, brought another factor to the forefront: COVID-scrambled supply chains that still haven’t fully recovered in some areas.
3. The construction industry has a labor shortage.
Many construction companies are struggling to recruit enough workers to fully staff their projects. One study found that the industry was in need of an astonishing 430,000 additional workers just to complete the projects on its plate for 2021. For years, the construction industry has struggled to replace older workers who are aging out, and that labor supply problem has now reached critical mass in alarming fashion.
Construction companies, trade schools, unions and other stakeholders are increasingly coming together in new efforts to improve skilled trades recruitment. But those efforts could be years away from bearing fruit on a large scale, so it appears that a construction labor shortage could be the new normal for some time.
Five Ways to Save in a Hot Renovation Market
We’ve heard about the problems — now how about a little advice? These five proven techniques for saving on home renovation costs will help you keep your head on straight in the madness of our current housing and construction market.
Be selective with your contractors.
Contractors may be in high demand, but that doesn’t mean you have to lower your standards. Always read a contractor’s reviews online, get bids from multiple contractors and always get a contractor’s estimate as a signed and itemized statement. Don’t let a contractor push you around in negotiations. It’s always better to let them walk away than suffer through the miserable experience and potential financial disaster of being stuck with a bad contractor.
2. Tackle a smaller job DIY-style.
If you’ve got some DIY experience, you might be able to save a bundle on a smaller job by taking it on yourself. Depending on your skills, you might be able to handle anything from replacing your front door to installing a backsplash in the kitchen. It feels amazing to have worked on your own home, and it’ll give you confidence and knowledge for future projects. However, know your limits as a handyperson, and be aware of the projects you should never DIY.
3. Find ways to refresh your home without remodeling.
Is a remodel just not in your budget right now? There are plenty of ways to give your home a facelift without any major construction. These are just a few ideas to try:
- Paint the walls
- Rearrange and/or replace the furniture
- Change the decor theme
- Refinish the floors
- Replace vinyl siding
- Bring in new floor or table lamps
- Perform a deep clean
4. Consider scratch and dent appliances.
If you can stand a fridge or a dishwasher with a few small nicks or dings, you could potentially save hundreds of dollars by purchasing scratch and dent appliances. These appliances have been discounted by their manufacturers due to cosmetic defects, but they still work perfectly well, and sometimes the scratches and dents are barely even noticeable. You’ll probably be responsible for handling replacement and/or installation yourself, however, and you should try to seek out scratch and dent appliances that are still covered by a manufacturer’s warranty.
5. Focus on improving efficiency rather than size.
Sure, you could pay an arm and a leg to add some serious square footage to your kitchen. But what if you could make it more functional and pleasant without necessarily needing a big addition? Instead, you could install some high quality custom cabinets with antique hardware or rearrange the appliances and countertops to something that suits your kitchen workflow better. Such changes cost a lot less and will keep your space tied up for much less time.