We already know that lumber and paint prices are on the rise, but according to a new report from Houzz, other renovation materials (not to mention various renovation services) are set to spike in cost as well.
It's not a huge surprise: Renovations have surged since the pandemic began. In fact, residential remodeling activity hit a six-year high last quarter. And apparently, that trend's only going to continue.
According to Houzz's data, both design and construction remodelers expect increases in project inquiries and committed projects in the third quarter of the year. The platform's overall Expected Business Activity Indicator is now at its highest point since 2018.
The news is obviously good for those providing the remodeling. But for investors who need to flip or renovate a property? It means problems (and higher costs) are on the horizon.
"Heightened activity is not without its challenges," said Marine Sargsyan, a senior economist at Houzz, in a press release. "Supply chain delays, extreme weather patterns, rising product and material costs, and labor shortages create major headwinds for the industry."
What's going to cost more?
There are tons of supply shortages, according to those in the business. In fact, over three-quarters of those involved in remodeling say product and material shortages affected their business last quarter.
Here are just a few of the materials that are in short supply and likely to see price increases in the near term:
It's a long list, for sure. And to make matters worse? Services are in short supply as well.
A whopping 92% of construction businesses are reporting a shortage of skilled laborers. Among those hardest to come by are carpenters, framers, cabinet specialists, and plumbers. Over half of businesses said they're seeing a moderate to severe shortage of carpenters.
The bottom line
If you're planning to renovate or flip a property, you'll face some headwinds. This year has already seen price increases and labor shortages across the industry, and as 2021 goes on, it appears that trend will rage on.
Make sure you're cushioning your budget a bit to allow for the added costs, and prepare for a longer timeline as well. If your project relies on outside remodeling work at all, you might have to wait in line for weeks or even months, so plan your investment strategy accordingly.