Because of the high-demand and shortage of homes in recent years, many homeowners have turned to building homes from the ground-up. The unfortunate reality is that – due to labor shortages and strained supply chains – the prices of building materials are going up.
With this dilemma, the question arises of whether you should build or renovate now or hold out until things level out a bit more.
Only one snag – there’s an unknown variable in that question. Will things level out? And if so, when?
The whole “what if” concept can get dicey, and before long we can find ourselves down its rabbit hole without a solution in sight.
Instead, let’s focus on what we do know.
Material prices are still being impacted as a result of the pandemic. Some materials, like lumber and insulation, are in low quantities and others like engineered subfloor and windows are struggling to meet demand.
When factories are at capacity – or, if there is one specific component the factory needs to keep making more and there’s a shortage of that one thing (say, the resin for engineered wood) – prices are going to go up.
Additionally, we’re seeing a ripple effect from the Global Financial Crisis from way back in 2008. Factory owners, still recovering from the recession way back when, are wary to spend a lot of money to expand their capacity as they are assuming that this surge is temporary…but by not expanding, they are keeping the higher prices from coming back down.
The truth is there are plenty of vendors out there who are reaping a windfall because of the increase in demand for home renovations. When ten people want to by the same flooring, and they only have enough for one house, they really do get to set the price. As such, they are overpricing both labor and materials. It gets worse when some of these vendors are unlicensed, who are overpricing and under-delivering.
We don’t want to scare you, far from it. But we do want you to be informed. Finding the right partners for your project is paramount. It can save you both time and money in the long run.
When you work with the right partners (ie an architect and contractor) you may face a longer wait time before they can start your project but it will be worth it when your project is executed properly as opposed to rushed and left far below your expectations.
Finally, if you do choose to wait it out to see if the material costs level out a bit more – you should know that it does come at a risk. While we don’t know if these prices will continue to increase, we also don’t know if they will come back down – especially to pre-pandemic rates.
Waiting may, unfortunately, result in an even higher-priced project as windows, metals, and even wood continue to go up. We’re not pretending to be economists, but until supply can meet demand, prices will stay up. The only way for that to happen is for the manufacturers to expand their capacity to meet the increase in demand.