During the Covid crisis, we have seen a number of products and services skyrocket in demand and thus in price. This ranges from poultry and meat in our supermarkets to the microprocessors that control our phones, our cars, and our appliances. One of the most notable areas where prices have risen has been in home additions.
You may have heard that contractors work to get you to sign on the bottom line. And, once they have you under contract, they encourage you to upgrade to increase their profit margin. This may hold true during Covid, particularly because:
increased demand for renovations and home additions
and a decrease in skilled contractors that have drawn the unscrupulous to the market.
The best way to prevent this is to draw up a detailed contract of the expectations of renovation. Also, you should include the materials you need to use and a reasonable timeframe within which the project should be completed. Experts recommend a late fee agreement that creates a discount for the purchaser for each day the project is overdue. That being said, you should know that there can be unforeseen costs and that delays are often inevitable. That is where a reasonable timeframe comes in.
If you are taking on a renovation project now, what you should be aware of in the Covid world is that prices have gone up dramatically for some good and perhaps surprising reasons. Home Advisor reports that “the average cost of a home remodel in 2021 is about $47,000″. In addition, “most home remodels will fall in between $18,153 and $76,388”. This, of course, varies with the type of project you’re undertaking, the contractor you hire, and the materials you use, with home additions, new closet space, and cabinetry installation showing the highest increases over the last year.
Other than good old fashion upselling, why then have prices increased so much due to covid? Here are a few of the factors that have driven inflation of costs:
- Demand: Census Bureau data shows that the average cost of a home rose from $257,000 in 2010 to $403,600 in 2021 (a 46% increase). The rising cost of houses driven by increased demand has resulted in a commensurate rise in the cost of renovations.
- Labor shortages: Contractors had to leave the renovation workforce due to the initial impacts of Covid. The reason being that many have not returned. This has resulted in increased demand for quality workers. Because skilled contractors have a surplus of work, they can charge more for their services.
- Supply shortages: Covid caused borders to close and factories to shut down. As a result, high-demand supplies such as wood and steel have been hard to come by. Prices of these commodities have risen between 35% and 40% over the past year alone.
- Rise in the cost of shipping containers: Covid has increased the demand for shipment of goods all over the world from the factory to doorstep. With this demand, the price of containers has risen to 3-4 times the price of what they cost pre-Covid. Your building supplies that are shipped in pricey containers reflect the cost the contractor had to pay to get them.
- Shipping Delays: Between several major weather catastrophes and the blockage of the Suez Canal by a huge container vessel, there have been some serious supply chain delays over the past year that have resulted in increased prices.
The rule for a renovation is that you can expect it to take 50% longer and cost 50% more than expected. Being aware of this may help ease your frustration as problems arise. Be sure that you’re choosing a project that reflects the value of your home. Otherwise, you may have trouble recouping the cost of the renovation. Once you’ve made these determinations, found your contractor, and written up a solid contract, then settle in to let the contractors do their work in a timely and professional manner.
Ivan Young is a writer from Happy Writers, Co. in partnership with Wherever, the outdoor kitchen cabinet manufacturer.