• How Inflation and Supply Chain Disruptions Have Affected Home Renovation Prices

  • With mortgage rates breaking 8.5% for a fixed 30-year loan, it may not be the best time to sell or purchase a new home. But for those who currently own a home, it may be the perfect time for a renovation. While it is true that many goods and services cost more than they previously did, including the cost of home renovations, renovating your existing home may still be more economical in the current financial climate. And we’re here to help you make an informed decision.  

    A Word About Inflation  

    Most of us have noticed grocery and gas prices increasing over the years, but it has really hit hard post-pandemic. In fact, in 2022, we saw it peak at 9.1% which is the highest inflation rate in the last 40 years. However, most workers have enjoyed significant wage increases, so we do not have as much purchasing power as we did previously. Unfortunately, inflation has also affected home renovation prices because the materials needed for the job have become more expensive.  

    Supply & Demand  

    One thing for certain is that the coronavirus shutdowns throughout 2020 and into 2021 have greatly disrupted the supply chain. You may recall many out-of-stock items (including toilet paper) during this period. All types of manufacturers, distributors, and carriers were affected on a global scale. People could not go to work and thus the demands for products could not be met. So, the prices for many items that were ready for sale increased.  

    Increased Cost of Materials Such as Lumber and Wood 

    As you may know, the foundation of most homes is a wooden structure. And components inside a home, such as most cabinets, are also made of wood. According to the United States Department of Agriculture (USDA) Forest Service, the pandemic caused lumber prices to skyrocket . As a result, the price of plywood and softwood lumber nearly quadrupled in 2020. Although it has been three years since the height of COVID-19, we are still seeing marginally increased prices today versus the price it was before the pandemic.  

    According to ProEst.com, there was a construction boom in 2020 and 2021 because many businesses were closed and people worked from home. Many homeowners saw it as a great opportunity to begin or continue their home projects. This increase in home renovation projects also caused the prices of lumber to increase.  

    Additionally, wildfires have contributed to the higher cost. Wood had to be sourced from areas that were unaffected by fire. Therefore, this led to less lumber being available. 

    Labor Shortages Still Persist 

    Manufacturers and distributors in supply chains are still reporting a shortage of workers. According to U.S. Bank’s article on supply chain issues and its contributions to inflation, employers are still having difficulty finding qualified laborers to fill available jobs.  

    Labor shortages are affecting the construction and contracting industry as well. Due to fewer people wanting to work in the construction and trade industries, companies across the board are having to pay their current and new hires a higher wage, which may trickle down to new home and home renovation clients in the form of higher costs.  

    Reasons for why there is a construction and trade laborer shortage may include a shift to remote work (which was accelerated by the pandemic), lack of education and training opportunities (due to the lack of instructors), many construction workers reaching retirement age (and not enough interest from the younger generation to work in the industry), and inadequate job marketing.  
    With that said, there have been efforts to combat the labor shortage, especially in the construction and trade industries. Many organizations have realized the importance of building a new generation of construction personnel and have developed solid plans to recruit and retain these workers.  

    Will Home Renovation Prices Go Down Soon? 

    While field experts do not predict a significant drop in home renovation costs in the near future, the price of lumber has gone down by 20% in the last year. The cost of a variety of building materials have also stabilized in recent months as well. So, we are heading in a positive direction!  

    Will I Save Money Doing It Myself (D.I.Y.)?  

    Some people opt to take on home projects themselves in hopes of saving money off labor. And in certain cases, the price of materials, too, if they elect, for example, kitchen cabinet kits from Ikea instead of quality materials that are built to last. Unfortunately, this may not always lead to the best results.  

    First, think about whether you really have the time and energy to tackle the work. Remember, time is money. If you are not paying for someone else’s time, then you are using your own time, which can add up, especially for those who are inexperienced. Secondly, a poor outcome may affect the value of your home. We recommend hiring a professional so you can do it right the first time and not stress over hiding a bad renovation job. Check out our article on D.I.Y. renovations for more information on this topic! 

    Why Now is a Good Time to Renovate Your Home 

    While costs may still be high, it also means faster turnaround times for those who want to get the job done quickly. Especially with Thanksgiving and the holidays just around the corner, it may be worthwhile to complete a quick project (such as cabinet refacing) that will wow your guests and make them feel at home.  
    Renovating your space may help you make the decision to stay in your current home instead of relocating. And even if you decide to move to a new home in the future, your current home value will increase with a professional renovation and lead to a quicker sale at a satisfactory price.  

    Additionally, if you need a home equity line of credit to fund your project, it is a good time to apply for one. According to Mansion Global, the average homeowner gained $125,000 in home equity during the pandemic. With this gain in home equity, you may be able to take out a larger loan to fund costlier projects.  

    On Point, On Time, and On Budget 

    We pride ourselves on delivering beautiful home remodeling results. We strive to present a finished space within the discussed time frame and work within the client’s budget. You get the best value for money when working with us. Great service is a top priority, and we genuinely care about our clients and projects. Contact The Cabinet Doctors today to see how we can help with your home renovation ideas!