Home renovations are never cheap. But the rising cost of sawn timber makes this statement particularly painful.
Thanks to a lack of wood, your 2 × 4 daily is now more than the cost of a chipotle burrito. That might not sound like a lot, but a year ago you could get a 2 × 4 for around $ 2-3. The price of a chipotle burrito today? About $ 7, more with additional fixings.
You can get creative and save work by rolling up your sleeves and doing the job yourself, but you still need to get your hands on the wood. Some resourceful DIY enthusiasts in Alaska even grind their own just to keep their projects going. This is not the likely path for most of us, but desperate times require wise action.
Thomas Jepsen, founder and CEO of Passion plans, a digital platform for house plans, blueprints, and more, said the price jump has caused new single-family homes to jump about $ 25,000. Although expert analyzes vary, most across the industry agree that lumber prices have increased between 200% and 400%.
The wood futures fluctuated strongly in mid-May and the high prices curbed demand. But even then, there isn’t enough wood to get projects underway.
To find out what rising lumber prices could mean for both homeowners looking to renovate and potential buyers looking to build a new home, we reached out to industry experts for their insights. Their suggestions also indicated that it might be a good idea to wait before doing the renovation.
Why are lumber prices so high?
Lumber price increases were driven in part by inspiration from popular TV renovation shows and millennials buying historic old homes with big plans to renovate and update them. Working, schooling and just being more at home because of the pandemic has also piqued the appetite for more home projects.
And when Americans don’t renovate their homes, they’re taking advantage of historically low interest rates and building their dream homes from scratch instead.
However, an increase in renovation and housing construction is only part of the equation. Add to this a decline in wood production due to mills and factories closed due to quarantines and government contracts, and then supply chain issues. And there is more.
“Honestly, if I had to come up with a term for this time, I would call it ‘the perfect storm,'” said Jepson, who has been in the home improvement business for a decade. “The beetle infestation wreaked havoc in Canada and everyone expected the construction industry to stop COVID, so supplies were also limited.”
Canada suffered for decades from a massive outbreak of bark-eating pine beetles that destroyed the crops of trees grown explicitly for sawn timber. And because one plague was hardly enough, British Columbia also saw an increase in wildfires.
Canada is the world’s second largest exporter of coniferous wood after Russia, and according to International Forest Industries, it moved up to number one last year. The loss of forests is one of the reasons Canada is moving to # 2.
“These are completely unprecedented times,” said Jepsen. “There are many projects that are canceled and stopped. I’ve seen massive houses with tarpaulin as they were sometimes stopped when contractors refused to honor the contracts they had after failing to consider the potential for an increase in the price of lumber. “
When will lumber prices fall again?
What goes up has to come down again. Unless it is about sawn timber prices.
That is not to say that lumber prices will not go down at all.
“Sawn timber prices will fall,” said Jepsen. “The supply will increase, DIY enthusiasts will go back to the office and things will normalize a little. However, the effects of beetle infestation are very real, as are the effects of increased forest fires in warmer climates, and I doubt the wood will fall to pre-COVID levels. “
With all the forecasts, one thing remains clear: prices may fall, but we will never see pre-COVID sawn timber prices again.
This saves you money with high lumber prices
Rising lumber prices don’t mean that you have to cancel your dreams of buying a new home or renovating a home. You may need to change your strategy.
For example, if you are thinking of renovation work, ask your contractor or architect to get creative.
“We saw and used some creative possibilities to use reclaimed wood as much as possible,” said Jepsen. “We got a lot of it through Craigslist and otherwise looked at when buildings were being demolished.” Part of it could be salvaged and reused. “
You can also think about it others, wood-free Renovations to Do, said Phillip Ash, founder of Pro Paint Corner.
“I suggest tackling any bathroom chores you want to do during this time or using the summer time to work on a landscaping to beautify the exterior of your home,” he said. “One of the easiest and most powerful renovation projects would be to give your house new exterior and interior colors.”
Why you should probably wait to renovate
We bought an old house last September and it’s more than 30 steps from the street to get to the front door. While it’s in decent shape, the rooftop terrace carved out of the loft in the 90s has seen better days.
Our goal was to rip out all of the rotting wood and start over this spring. The planned cost of such a renovation was approximately $ 15,000.
But now? Contractors say it’ll easily be $ 30,000 – and that doesn’t even include the fantastic new grill I promised myself.
Needless to say, we’ve decided to postpone the project for at least a year and just hope our feet don’t crash through rotten wood as we enjoy the deck this summer.
In Jepsen’s eyes, this is a wise choice as not only the shortage of wood but also the worrying shortage of equipment and rising steel prices and high labor costs of the contractors in demand are high.
“If possible, homeowners would postpone renovations for a year, which should help with the price of the equipment,” he said. “I also expect at this point that we will be in a much better position to address the labor shortage as the effects of stimulus funds have subsided.”
Jepsen’s advice seemed to reflect how many homeowners are feeling. According to a recent survey by Fortune-Researchscape International, nearly four in ten would-be DIYers have postponed a project because of skyrocketing costs.
But that doesn’t mean that DIY has stopped altogether. In May, Ted Decker, President and CEO of The Home Depot, spoke specifically about DIY customers in an earnings call: “The strong demand we saw in the second half of last year continued into the first quarter. From gardening to organization, new and existing customers deal with home improvement. “
When asked about the lack of wood during a Q&A, Decker said: “An OSB sheet (wood-based material) has quadrupled in price and has increased even further since the end of our fiscal quarter. At the same time, demand has kept pace.”
For what it’s worth, Jepsen does Not recommend postponing the construction of a new home: “We have seen a shock to the market with property prices rising rapidly and they will only rise.” Home construction is still investing in an asset that will increase in value over time. “
6 reasons to wait to renovate
Still not sure whether to renovate this year or wait? Here are six reasons to put the brakes on on your renovation job, based on what the experts say:
1. Prices are likely to fall
The jury can be out when, but wood and equipment prices will fall again. While they are unlikely to return in pre-COVID times, they should at least drop to a price that is cheaper than today’s high cost.
2. You have more time to save
If you postpone your renovation for a year, you can invest that money smartly. Put it in a high-yield savings account To spark interest, or if you can wait an extra couple of years, consider go the bond way. In fact, if you’re a high risk, high reward player, you can Invest the funds in the stock market. While inherently risky, the stock market averages around 10% annual return.
If you were planning to pay for part of the renovation out of pocket and fund the rest, this could be a way Reduce the amount you need to borrow from a lender when the time comes.
3. Contractors are currently planning far out
We have storm windows overlaid on our historic wooden windows for ease of insulation (and to provide us with more user-friendly screens in the warmer months). We paid the deposit in early May and the company promised that work would start in mid-August.
This is not an isolated experience. Due to the high demand, contractors are planning several months. If several contractors are involved in your renovation (bricklayers, plumber, Electricians, carpenters, etc.), coordinating their schedules might be impossible – leaving your house as a construction zone for several months.
4. The threat of COVID-19 will decrease
With the number of Americans vaccinated growing every day, it makes sense to stop the renovation work. If all goes well, we’ll have herd immunity by next year and you may be more comfortable with contractors working in your home without a mask.
5. Take into account the quality of the work
Newly built houses are noticeable when they are first built. With some developers using less expensive materials and building contractors rushing to get as many homes out as possible in a tight time frame, buyers often find that the honeymoon phase with their newly constructed home doesn’t last long.
This was evident after the real estate boom in the early 2000s, a decade later Transformers noticed an increase in deficiencies in the houses that were built quickly during this period.
I would like to believe that most contractors will recommend quality materials and do a thorough job. However, at a time when supply is low and demand for contractors is high, there is a risk that employees using shortcuts for your renovation projects will result in substandard work.
6. You could avoid impulse buying
Renovations are the thing right now. Seeing everyone’s Instagram posts about their new kitchens and bathrooms can make you want to scroll endlessly. However, if you take a year to think about the renovation, it can be a decision as to whether you really want to spend your money on it.
If after a year you’re still ready to spend $ 20,000 on a new kitchen, you can feel more confident about spending that money.
Timothy Moore is the editor-in-chief of WDW magazine and is a freelance writer and editor on topics such as personal finance, travel, careers, education, animal care, and automotive. He has been working in this field since 2012 with publications such as The Penny Hoarder, Debt.com, Ladders, WDW Magazine, Glassdoor, Aol and The News Wheel.
This article originally appeared on www.thepennyhoarder.com