Home Remodeling Is Surging and the Cost of Materials Is Higher Than Ever

In contrast with the pandemic’s negative economic effects, more people this year are seeking to purchase or renovate their homes. This would usually be good news for contractors, but disruption of the global supply chain is making it more expensive to complete these projects. Many homeowners have had to wait longer — and shell out more money — for their renovations. 

“The cost of materials has gone through the roof … For some, it would take some out of the game.” –Sam Knolton, Pinnacle Contractors 

This issue is different for low-income homeowners, who desperately need repairs to sustain their homes. If these families are priced out because of the high costs of construction and materials, they might not be able to fix large structural issues. There are resources to provide loans for these situations, but they are often not enough. 

Listen: Why home renovations and purchases are skyrocketing and what it means for you.

Guests

Kermit Baker is a senior research fellow at Harvard University’s Joint Center for Housing Studies. He says setbacks in renovations are being fueled by global factors. “The cost of lumber has tripled over the last three months … We’re seeing a lot of markets that are slowed down by fundamental problems in the supply chain.” He says these delays and high costs have different effects for low-income homeowners seeking repairs. “We still have a lot of households that have not been doing very well financially … 40% of owners report they have lost income … 10% report they are behind on mortgage payments.”

Baker says the supply chain is not the only factor of renovation setbacks. “About 30% of workers in the construction industry are immigrants or foreign-born. Construction is second only to agriculture in terms of dependence on immigration. So if immigration isn’t addressed soon, that will be a big issue.” The higher demand for renovation projects is overwhelming some companies. “I think a lot of contractors that were hoping for a really strong market are hoping for something a little less strong so they can manage their projects in a more manageable way,” he says. 

Marissa Daeger/Unsplash

Sam Knolton is the owner of Pinnacle Contractors in metro Detroit, with 35 years of experience in the construction industry. He says even simple construction materials, which used to be inexpensive, have nearly tripled in price. “The cost of materials has gone through the roof … For some, it would take some out of the game.” Because of these high prices, Knolton says clients are being made to wait longer on their renovations. “I have a few clients right now that are really really upset with me even today.”

Knolton says these setbacks have changed the way he does business. “I’m giving myself more grace. For instance, I’m managing expectations for clients … I’d rather under-promise and over-deliver to survive this thing.” Despite rising costs of materials, Knolton says he’s trying to keep pricing reasonable. “I really want to honor the prices … for me to not be able to do a door because a grandmother can’t afford it, that’s an issue for me.”

Pat Cooney is assistant director of economic mobility at Poverty Solutions with the University of Michigan. He says renovations are more crucial to low-income families with older houses. “The primary challenge for keeping stability for a lot of these households are property taxes and home repairs.” When renovation costs rise, Cooney says these homeowners are often overlooked. “Low-income homeowners are sort of left out of this market … traditional lending tools are often out of reach due to home assessments in Detroit neighborhoods.”

Cooney says low-income families need to have the ability to renovate their homes. “We think that home ownership can be a real tool to get that stability … but the resources need to be provided.” He says the city of Detroit does have a loan system in place for these households, but it often falls short. “The resources dedicated to that don’t come close to matching the overall need.”