Should I Remodel or Improve My Home This Year?
by David P. Pollard AIA LEED AP
The Current State of the Construction Industry
First and foremost the challenges you are hearing about on the news in the construction industry are very real. We continue to see unprecedented volatility in costs and lead times, both for materials and labor. This is a challenge for the entire construction industry, but for remodeling this is especially difficult. Remodeling work operates in a world with so many variables – from families living in their homes during construction to seemingly infinite unknowns within the walls and ceilings. We operate by controlling everything that we can while accepting that some things are naturally out of our control, and we absorb that risk as a professional remodeling company.
To control what we can in normal times; we manage a team of experts trades and use previous project cost data to understand what these costs will likely be. While every project is 100% custom, we use carefully selected vendors so that we can have strong lines of communication and maintain expectations for delivery times and quality control. Our historical cost data is crucial in our operation to convert smart and thoughtful concept designs to built projects while managing your budget the whole way through.
However, what we are seeing today has compromised our control over understanding costs, managing lead times, and has frankly tipped the scales on what is and is not controllable in the remodeling and construction industry.
This is not unique to LivCo – we have seen supply chain disruption, unknown costs, and extreme delivery delays from most manufacturers large and small — Companies as large and historically consistent as Kohler, Pella, Marvin, and major lumber yards are seeing the same issues. Smaller companies are also affected by the costs of raw materials and labor shortages.
As always, we are working with our clients as a team to guide them toward achieving their dreams. We are setup to provide high-level design that is also shaped by your budget. With our Client-First mentality in mind, we have prepared a list of frequently asked questions we are hearing from clients and prospects these days:
Is This a Good Time to Remodel My Home?
In the words of an attorney or accountant…. it depends. The majority of our clients come to us wanting to start construction two weeks ago, so clearly there is a need to improve their home as soon as possible. If you need to make certain changes to your home and have a tight ceiling on your budget, then it may not be worth it to you invest in the design exercise to figure out what your home can be. But, it may be a good time to invest in planning if you truly love where you live – your neighborhood, neighbors, lot, town, sunlight, views, history, etc…. So first ask yourself if you want to live WHERE you are, and then it may make sense to engage design to determine WHAT your home can be. (Our Specialty)
Are Prices Going to Go Back Down?
Interest rates continue to be low, comparable property values are continuing to rise, and wages seem to be increasing – so perhaps the increases in construction that we are seeing are here to stay. Relative to the price increases we are seeing across the country, including the price of a cup of coffee at Starbucks, perhaps this is just what construction costs for the remainder of the 20’s.
We do know that there continues to be a housing shortage and high demand for remodeling projects, which means even as supply stabilizes the demand is still there, with potentially more pent-up demand as construction projects have delayed because of the current pricing conditions. All of these conditions point to the likelihood of costs not being back where they were pre-pandemic anytime soon. A recent JLC Online article lends current research with conservative estimates of lumber prices alone recovering to ‘normal’ levels in 2022.
What Does This Mean To Me?
A major differentiator of any design-build company is access to real cost data to help support and shape the design phase. LivCo was conceived as an architecture and construction company that designs great homes that actually get built. This is by bringing costs and budget into the conversation on Day One. The recent volatility (especially over the last three months) has made it a challenge to deliver on this promise. We have seen early budgets increase from 20-40% over the course of several months, all while we are keeping our fees exactly the same. We are advising any clients that are up against a hard budget ceiling, that today’s environment coupled with previous budgets means they will likely have to either spend more or build less.
So What Should I Do?
Another factor to consider is that design and planning timing is not directly impacted by these supply chain and commodity issues. Our design team and their efforts are not subject to the volatility of the price of a 2×4. Our typical full design process takes 4-6 months. So, with all of the market uncertainty, if you know you want to stay where you are, but want to eventually improve your living spaces, now could be the best time to invest in design, so that you are in position to start construction whenever works best for you.