Nobody enjoys overpaying for anything or feeling ripped off. For most purchasing decisions, from small items to large items, we are all doing mental math to see if the price aligns with our perceived value and quality. In general, we want the highest quality at the lowest price, expecting reliability, functionality, AND affordability.
To put this equation into a broader context, every dollar spent by one person is a dollar earned by someone else. This delicate equilibrium between spending and earning is what drives our economy. For some common goods and services, we regularly purchase as consumers, we understand why they cost what they do. However, for home services like home improvement projects, maintenance and emergency work done in and around your home, cost has always been uncertain and difficult to assess.1 Add to that the current pandemic and its affect on the home remodeling and new home construction industry and it’s difficult for homeowners to understand costs and why it takes longer to complete a project than pre-pandemic.
We recently received a State of the Industry letter from the Builders Association of Indianapolis (BAGI). Its focus was to give a better understanding of why a delay in inventory of product or a rising increase in price is occurring in home remodeling and new home construction from a non-biased viewpoint to share with our clients and potential clients.
While much of the publicity has been centered on the rising cost of lumber over the past 18-24 months, the fact of the matter is that pricing for all home building materials and products has increased dramatically as well as the lead times to receive them.2 According to the HIRI and the AGC, in 2021 the building products market increased conservatively by 13% overall and is estimated to continue to rise in 2022. They report that in addition, the wait time to begin a job from when the contract is signed is approximately 3 months. Some materials have risen more steeply such as steel 40%, lumber and plywood 63%, copper (including wire for electrical cords) 22%, and brass for fittings 44%. This does not even consider the rising cost of subcontractors and the immense labor shortage in industries such as framing, interior trimmers, masons, and more. Additionally, the demand for freight services is driving up the price of deliveries, adding further to the price increases due to the cost of on-highway diesel fuel.
Home Remodel Material Costs Increasing and Timing Delays
To simply illustrate how this all affects us, BAGI has pulled statistics on cost and lead times on a few well-known areas common to most renovations:
- Windows – lead times are more than 5 months when it was 5 weeks
- Cabinets – lead times are as high as 8 months when it was 3-6 weeks; pricing has increased more than 100%
- Garage Doors – lead times are as high as 4 months when they were 2 weeks; pricing has increased more than 100%
- Appliances – lead times are 9 months when they were 3 weeks; pricing has increased 12-15%
- Plumbing and Lighting Fixtures – some manufacturers have cancelled 50% or more of their SKUs because they needed to streamline production in their manufacturing plants to try to meet the demand; sources vary but estimate costs have escalated for some products more than 100%
In the face of such volatility and uncertainty, many producers are drastically shortening the duration for which they will guarantee prices, some only 5-7 days. This is very problematic for contractors, who must typically guarantee a price to an owner long before placing a firm order for materials.
Navigating a New Remodeling World
We at Corinthian, strive for efficient project management and establishing reliable project timelines, while providing fair pricing. Communication and patience are qualities we have always valued, but in these difficult times in our industry, they have become the cornerstone of how we do business. We will not compromise on the quality of our remodels, providing an excellent product as efficiently and fairly priced as possible. We ask for your continued understanding as we navigate the new reality in our industry.
Here are a few tips on what to look for when choosing a contractor:
- Three Hamburgers: A Remodeling Project Fable
- Three Myths of Competitive Bids for Remodeling Projects