Why is Remodeling So Expensive?

We’ve got some answers and an even better question.

Great question. We’ve got some answers and an even better question—what can be done about it? We’ve got 10 ideas that might help.

Let’s tackle the “Why” first. Which statement best describes your reaction to this statement: The most basic 5x9 bathroom gut & redo in 2019 now starts between $30 & 40k?

If you checked all the boxes we understand. We get it. We did too. Let’s be honest about it. Remodeling is expensive—even to us. Oddly enough, however, nobody is getting rich from it. So, no, your kitchen remodel isn’t sending our kids to Harvard or our staff vacationing in the Azores.

A rising tide raises all boats. As is the case with all economic recoveries, costs go up. But unlike buying a new car that instantly begins to decrease in value, a remodel increases home value—in every category. So, you have to ask yourself is it the cost I’m worried about or the value?

If you dig deeper you will see there are three major categories that account for these increases:

Running a business, any business, of any size in 2019 is more difficult and expensive than any other time in history. Whether it’s liability insurance, licensing, healthcare, government regulations, building code changes, technology infrastructure, all of it has increased and keeps increasing.

However, contrary to popular belief, a larger private company with economies of scale in staff, buying power and efficiencies can actually hold down the pricing impact on clients. To a degree.

Census Bureau’s Business Dynamics Statistics.

Furthermore, only 36% of construction companies make it 5 years or more—according to a recent study—the lowest among all other industry sectors. They fail for a variety of reasons, but mostly because they know hammers and nails, but not cost of goods and proper margins. When they go away so does your warranty. Worst case, you could also lose the money spent on an incomplete or poorly done project.

We’ve been in business for 36 years and counting. About 10% of our projects in the past 5 years involve product warranty issues, and less than 1% involve warranty work on our labor. ​

The very nature of remodeling is labor intensive and specialized. Consider all the people(s) who are usually involved in even a small remodel like a bathroom:

One of the biggest impacts on labor cost is the on-going shortage in skilled labor. This translates into higher wage costs to attract and keep those hard to find quality craftsmen. And as everyone who has a job knows, the costs of taxes, insurances and health care seem to increase at a rate that outpaces take home pay.

Murphy Bros: “Understood, mam. Unfortunately, even if it’s just a half bath, we can’t actually send out half a person to do the work.”

This common conversation above illustrates the point that the size or scope of a project doesn’t necessarily have a significant proportional impact on cost. It may take a little less time, but the work is the work that has to be done. There are economies of scale in remodeling but there are baseline costs that need to be covered for every skilled trade involved.

All the things we do for a big job are still the things we do for a smaller one.

Improved materials and “Best Practices” for installation of products like siding, windows and flooring have become more wide-spread, complex, and sometimes labor intensive which also adds to costs.

The variety of remodeling materials has exploded in the past decade. Tile selections alone make the cereal aisle at the grocery store look barren. Which is a good thing for homeowners. However, there are unintended consequences.

LEFT: Ceramic tile "Trace Umbra" $3.10 Sq. Ft. | . RIGHT: ceramic tile "Hard Leather" $9.05 Sq. Ft.

New styles and materials, glass, ceramic, porcelain, concrete, stone or synthetics for traditional “tile” applications for instance, can require more time and labor to install.

In addition, the quality of many commodity materials has actually gone down. Product failure requires we fix it and that takes time and money, which is why we tend to advise clients to stay away from the entry level choices at most big box stores.

Overall, our cost of materials has gone up 7-10% per year for the last 5 years. Add to that the popularity of such newer upgrades such as Cambria to the mix and you’ve got options that can easily blow anyone’s budget by thousands.

Since 2013 according to the 2019 Cost Vs. Value Report, remodeling costs have increased 4% per year—every year.

Whether due to inflation, market recovery, or a number of other factors, if you look at the last couple of decades, it seems reasonable to assume remodeling costs are likely to continue to increase 4% annually.

Consider not waiting till next year to remodel. Patience may be a virtue, but in this case it’s a costly one—in the thousands. Last time we checked, death, taxes and remodeling cost increases all appear to still be immutable. We’ll be the first to let you know if that changes.

Prioritize what will really achieve your goals. Is it return on enjoyment? Resale return? Essential maintenance? You may want to do both a kitchen and a bath, and a deck, but which one(s) will achieve your highest priority goals? Hint: if you’re deck resembles the “Names of God” booby trap in Indiana Jones and the Last Crusade, you might want to do that one first.

Consider less expensive alternatives. For instance, there are five grades of granite to choose from with commensurate price tags. Some new laminates are pretty attractive and less expensive than quartz. Remember, you really determine the cost of your remodel by what you choose.

Semi-custom or box cabinets can save thousands of dollars over custom cabinets if you’re willing to accept fewer options and a little less on sturdiness and looks.

Construction financing has come a long way in the past few years with lots of newer offerings. If you could pay for a new kitchen with the same monthly cost of a car payment that might make such a major remodel workable.

You could buy all the materials yourself and save as much as 20%! That’s assuming you can get wholesale pricing, know what to buy, how much to buy, understand wastage and normal margins for errors, can get it delivered, can identify imperfections, damage, incorrect size, have adequate storage, time to return defective items, are on call 24/7 to pick up items that are short, miss-cut, or become unusable due to weather or materials drying. Also, any product warranty issue in the future and the labor to fix it are all on you.

You could always hire Chuck. You know Chuck—Chuck in a truck. The one-man-band, the ultimate small business owner. He’s the guy you find on Angie’s List who quotes you a bathroom over the phone for $10k. And he can start today! Seems his schedule just suddenly cleared up. What a break for you! That is until he gets in over his head, fails to show again, and you’re paying us to fix it—paying for it twice.

Isn’t there a whole DIY industry out there to support you? I mean after all, how hard can it be? Better question would be how long can it take? How long do you got? Not to judge, but it is not uncommon for us to get a call that starts… “My husband thought he could…”

Hire a company, not a guy, that has a long and clear track record of success, an experienced team that has the resources, technology and efficiencies—to make sure you’re not paying a dollar more than you are getting in value.

Be extra kind to your rich relatives. Hey, it can’t hurt and it could pay off. We could tell you stories.

While all, most, many of us can put paint on a wall, we’re not really capable of skilled carpentry, creating exact architectural layouts, floor plans, 3-D renderings, buying products, running electrical, plumbing and HVAC, or managing a cadre of trade partners, pulling permits...

You get the idea. It really is harder than you think and costs more than you expect because remodeling really isn’t in your wheelhouse. Nor is it a commodity. It is the combination between an artist, an engineer, a planner and a counselor.

Some see remodeling as a luxury, some as a thoughtful investment, and others as an essential due to deferred maintenance or insurance related tragedies.

Regardless of your perspective, if done with care and honesty, it will be worth it.

Talk to us

Call (763) 780-3262 or talk with a professional remodeler about your project.

Schedule a Consultation