Homeowners tend to look at the prices first prior to embarking on a home renovation project. This is because it is known to be much less expensive than buying property outright. Homeowners try to do it themselves mainly because it would be much cheaper than hiring professional construction workers.
From materials to the labor costs, homeowners will definitely be able to save more money if they do it on their own and start from scratch.
However, there may be a bit of bad news on this front for DIY construction workers and interior designers out there. If home renovations are expensive now, it might get even worse in the coming days. Here’s why:
The Labor Market
According to a recent survey by Houzz projects regarding home renovation could become more expensive this year because of the fierce labor market and increasing costs of materials. This is according to the 3378 United States Property Renovation Businesses that have participated in the said survey.
One good thing about this trend is that the market has been steadily increasing in the home improvement niche. There are many customers who choose to have their house renovated. However, many home renovation businesses are still being cautious about outsourcing laborers because of the lack of security in many regions.
Paying the Labor Force and Problems with Security
Aside from paying the workers outright, many design and construction firms in the States tend to pay more for the vetting of these laborers. Aside from labor costs and security, another factor that could cause the price of renovation to increase significantly according to U.S. based economists is the subsequent increasing of raw materials in value.
Trading Issues and Increased Prices of Materials
From lumber to stainless steel and aluminum, the price of these raw materials seems to have risen significantly over the years by 40%. This is due to the import tariffs placed by large U.S. trading partners including China. (Source: James Rosseau, LegalShield CCO)
In addition to this, the Housing Activity Index from LegalShield states that, the worsening trade relations between the U.S. and their partner countries have also steadily affected the cost of raw materials.
This does not even include the steadily increasing interest rates for the raw materials as well as the renovation and the labor.
The Silver Lining: Home Renovations In Lieu Of Property Investments
However, in the year before (2017) the aforementioned annual Houzz survey showed an optimistic view of revenue growth in the coming years. This means that the exorbitant prices as well as the significant increase in home improvement needs had been expected all along.
In fact, according to the website, at least 3 out of 5 construction companies have increased revenue in the last year. What factors may have contributed to this? Read on to learn more.
One of the main causes of the steady increase in the need for home renovations over the last few years is the rise in real estate prices.
Home Renovations vs House Buying
According to experts, home improvements can increase equity as well which encourages homeowners to just apply for extended credit lines and more loans to pay for renovations. This is why most people who can never afford to buy their own home choose to just invest in home improvements instead.
Furthermore, other experts from the Harvard Joint Center for Housing Studies predict that homeowners would be willing to spend up to $340,000,000,000 just for home improvements alone for the rest of the year. This presents a small but significant statistical growth of 8% from last year.
Therefore, while there is still a large market for home renovations, a lull in the real estate market for renovated homes could balance it out in the next two years or so. (Source: Abbe Will, Associate Project Director—Harvard Joint Center for Housing Studies)
The Role of Social Media
If one is still interested in buying houses, social media definitely can play an important role in the quest. A lot of real estate websites as well as construction firms already offer a social media presence to make it easier for customers to find them on the web.
This is why homeowners should really think about their options before deciding on whether to just buy a new house or spend their hard earned money on possible renovations. Would it be worth it to pay more for labor costs and materials over time than just to avail an already built dream house for the family?
Consider the aforementioned factors carefully and one will find the answers that they seek sooner rather than later.