When will remodeling prices come down?
Is that a fish riding a bicycle?
That was the question asked of homeowners and remodelers this past year and the answer is revealing. Half of the homeowners (50%) expected prices to go down while only 1% of remodelers shared that expectation. In other words, 99% of remodelers expected costs would rise. So, what do they know that homeowners don’t know? They know pigs can’t fly and neither can fish (with rare exceptions).
Prices are actually going down for some things, for now.
“Prices have already softened in the building materials commodity market and you are starting to see that reflected in the cost of dimensional lumber at the big box stores beginning to drop back into the realm of almost reasonable,” explains John Murphy, owner of Murphy Bros. Design Build Remodel.
“However,” Murphy explains further, “Unlike with new homes, which will see a drop in prices, most remodelers aren’t heavy users of those materials, and so, logically, that’s not what’s been driving the steadily increasing cost of a remodel over the past 10 years.”
So why does the cost of a remodel continue to rise?
It’s a combination of things; inflation, labor, demand, the general cost of doing business in an ever more complex world. Add it all up, throw in a major ongoing disruption in the supply chain and you’ve got a bathroom that 5 years ago cost $15,000 now costing $30,000.
“Think about it,” says Murphy, “Outside of another economic depression, people aren’t taking pay cuts to enter the job market, but they are taking signing bonuses to flip burgers! I have yet to see in my 38 years a price cut in windows, paint, doors, millwork, countertop surfaces, or flooring, which are all labor-intensive products we use daily in a remodel.”
While it’s true that Cambria™ hasn’t increased its prices for a couple of years, it doesn’t cost less than before and you can bet it will increase in the next year or two. It will never cost less.
It takes a Village
“It’s a common refrain from homeowners. They call and start out by saying it’s just a small bathroom they want to remodel, nothing fancy. To which we reply size doesn't really matter. Today’s range is $30,000 to $40,000 depending on the quality of materials and scope. There’s a gasp and then the sound of a body hitting the floor,” Murphy explains with a wry smile. The rest of the conversation goes something like this…
“But how can that be? It’s just a small little tiny itsy-bitsy bathroom, they protest.” And it’s getting smaller with every passing minute.
“I know, mam, but I don’t have a tiny crew to do the work; I can’t send out half a person to do a half bath remodel. In most cases it takes just as many people to do a small remodel as a large one. There’s the designer, the office admin, the project manager, the carpenter, the plumber, the electrician, the tile setter, the, well, you get the idea,” explains Murphy.
There are better questions…
If, generally speaking, remodeling will never cost less, and it won’t, the better question(s) are:
- How much more will it cost each year that I wait?
- What do I risk losing while I’m waiting?
- Where can I go to get the most for my precious money?
The answer to the first question is a bit tricky. You can look at the last 10 years historically and easily see a 5-10% increase annually depending on the year. We blogged about this a few years back and the story hasn’t changed much, except for one respect.
“Lately however,” says Murphy, that seems to have accelerated for obvious reasons. And so I would advise homeowners calculate a 15-20% increase in prices in the next 12-16 months.”
The second question is highly subjective but fairly straightforward. As this homeowner reveals in this brief video interview, what’s at stake in waiting is far more than ROI, it’s about the time and experience that you can never get back…
The third question is much simpler. Go with an established company with decades of trade partner relationships. That’s where labor increases are most held at bay. Better yet, look for a company that has its own labor such as carpenters and project managers, and isn’t at the mercy of outside suppliers.
And yes, full disclosure, that would be us.
The best news of all…
The overall cost of a remodel is still primarily up to the selections of the homeowner. You really do control the budget in the decisions you make. Our job is to help you make the best ones possible to achieve your goal of a more beautiful, functional, and durable home—not just different—but better.