Are Renovation Costs Still Increasing?

By Nate Moore

Lumber prices have increased to over $1 per board foot. The highest in history and double the price from just 3 months ago.

Throughout the pandemic material costs increased while availability of materials have become increasingly volatile. Building materials which typically could be delivered as a complete order next-day have turned into incomplete deliveries scheduled weeks out.

Additionally, fixtures and finish materials such as tile, lighting, faucets etc. have been more challenging to acquire.

Material Availability

• Manufacturer shutdowns and delays result in scarcity. Article

• Delivery and logistics have been hindered by issues with labor, inventory management and geographical risk. Article

• Supply chains continue to be decimated, creating a trickle down effect.

Material Cost

• Lumber is at it’s highest price in history. Article

• Housing demand, low interest rates, and increased demand for renovations continue to push prices higher.

• Difficulty in procuring construction materials and the cost associated with shortages won’t go away anytime soon, experts say. Article

How does this affect those looking to renovate?

1. Cost

As material costs continue to rise, renovation project costs are bound to continue to increase as well. The good news is that even through 100%+ increase in building material costs, we at Moore Construction Group haven’t charged clients under contract an additional dime. While new contracts reflect the price increases of the past year, once clients sign they are locked-in and protected from the trending future increases.

2. Timelines

While many projects were delayed by material shortages and logistic issues in 2020, suppliers have begun to improve. Certain materials can still be challenging to acquire, so an increase in project duration should still be expected.

The real delays now are related to getting renovations scheduled. In the DMV (Washington DC, Maryland, Northern Virginia) astronomical property value increases, combined with low interest rates and booming renovation demand have pushed new project start dates out.

3. Safety

As with most industries, General Contractors and Design/Build firms like us had to adapt. With health and safety as the primary concern, virtual consultations, masks and sanitization have become the norm.

As we specialize mostly in large-scale projects, our work areas generally stay “quarantined” from the rest of the house using zip walls, floor coverings, and other protective equipment.

While effective, safety measures do add time and cost. As there are many people involved in each project including employees, subcontractors, vendors, etc., any illness can result in delays.

So are costs still increasing?

While no one can say for certain, all indications seem to point to continued increase cost. Robert Dietz, chief economist at the National Association of Home Builders noted “Strong housing demand, low-interest rates and a boom in home remodeling continue to push prices higher. At some point, however, the basic reality of affordability should at least slow some of the growth.” The good news is, at least in the DMV, Real Estate value is headed upwards as well.