Well, it’s basically a perfect storm of reasons, some of them obvious and some not so obvious.
Here are the basics:
1. Increased demand
During COVID there was a huge increase in demand for remodeling services as homeowners scurried to fix up their homes while they were stuck at home. First during lockdowns and then as many companies modified employees’ schedules to accommodate more work from home hours.
2. Contractor labor shortages
As more homeowners sought to remodel, qualified contractors and the labor force, in general, have become more and more lean. Contractor availability was down, and demand was up. This drove costs up, and those costs remain high even as remodeling has started to ease off slightly.
3. Manufacturer labor shortages
As demand increased and factories were hit by illness, manufacturers scrambled to find new employees and to get them trained in an already shrinking labor market. This along with rising materials costs has been reflected in multiple price increases sometimes just weeks apart.
4. Demographic trends
Even pre-pandemic, the aging workforce had many older workers retiring. In addition many older workers took early retirement due to the pandemic. Lastly, there are fewer workers to replace them due to lower overall trending birthrates. This has only added to shortages and rising costs.
5. Material shortages
Everything from building materials such as drywall and plywood to decorative materials like cabinetry and plumbing has been affected by supply and demand as well as supply chain issues. It was impossible to get certain materials out of several countries as many of them were experiencing the pandemic on their own schedule and with their own set of challenges. Many manufacturers were forced to move their entire operations to different countries causing major delays and disruptions for parts, pieces, and end product.
6. Interest rates
Rising interest rates in the 4th quarter of 2022 are slowing new construction and providing homeowners less incentive to move and more incentive to stay in their existing homes and improve them using the existing equity already at their disposal.
Will home renovation costs go down?
We may eventually see slight decreases in costs for labor and materials once the remodeling frenzy backs off a bit. However, it is unlikely that these will be major decreases based on the trends associated with the population labor force that were already in place and ongoing supply chain challenges that are taking a long time to normalize. Lastly, ongoing inflation continues to raise the costs of labor and materials.
Is it a good idea to remodel right now?
Now is a great time to remodel since labor shortages are backing off slightly and inflation is continuing to trend upwards. Next year’s kitchen remodels will still cost more than the ones performed this year. Home equity will likely stabilize for a bit due to rising interest rates, but since the average slowdown lasts only 15 months or so, statistically speaking the correction will be somewhat short-lived. And, just like a trip to Europe or a new luxury car, remodeling adds value to our lives in other ways than in direct correlation to home equity. When you invest in your home, you are also investing in your quality of life, something you can’t always put a price tag on.
Where do I find a good design-build contractor to do my remodel in Chicagoland?
TKS Design Group is a family owned and operated business, with Chicagoland’s most seasoned kitchen, bath, and interior designers. If you’re looking for a systematic and collaborative approach, you can trust our team to design a home tailored to your vision and specific lifestyle requirements.