If you’re ready to start a large-scale remodel, you may need to deal with the ongoing fallout from the coronavirus-related economic shutdown. While do-it-yourself (DIY) projects are enticing, working with a contractor will help to mitigate its impact.
The problem, as we all know, started in March and April of 2020. Some states and localities halted all construction, and homebuyers in other areas canceled or postponed their projects. The sudden drop in demand led to plant closings throughout the building supply chain, from lumber mills to window, door, and appliance manufacturers.
Housing starts bounced back quickly, thanks to a lifting of restrictions and 3.5% mortgage interest rates. The U.S. Census Bureau reports that August 2020 starts were up 22.6% from the previous month and up 23.4% from August 2019.
Unfortunately, the supply chain has been slower to rebound. Some manufacturers have two-month order backlogs, and others have been struggling to get parts. For example, most refrigerator compressors are made in Mexico, where factories also closed for a time and are still catching up.
Between April 2020 and April 2021, the National Association of Home Builders said the “price per thousand board feet” increased by nearly 250% — from $350 to $1,200. Prices then soared past $1,400 in early May and have continued increasing since. While material prices are slow to correct, there are ways to get your desired home enhancements without breaking the bank.
A Possible Solution to Your Supply Chain Woes
A contractor and designer can help discover creative solutions that may be overlooked by a DIY project. Making small adjustments that only minimally impact the way the home looks and feels—otherwise known as value engineering—can get you the remodel you desire with less of a financial impact.
The value engineering process looks for ways to economize without sacrificing amenities or quality. One obvious solution is to choose less expensive products, but you can also tweak designs. For example, simplifying the exterior facade on all or part of the home—reducing the number of corners and trim details—will save labor and materials without crimping interior living space.
A contractor can also help mitigate backlogs and material delays. Current supply shortages include commodities like treated lumber, which is needed for areas that require moisture or termite resistance, such as deck frames and sill plates (the boards that secure the home to the foundation). Meanwhile, there have been delays in getting some manufactured products and options. For instance, some appliance companies are only making stainless-steel finishes at this time. Contractors who are continually ordering materials in large quantities may experience less of a delayed impact than a DIY’er.
One final point here: material prices, order lead times, and available options can vary from market to market, so a news story or the experience of a friend in another state may not apply. The only way to determine how these issues will impact you and your project—and what the proper response should be—is to discuss them with your contractor.
What to Expect Moving Forward
These unpredictable delays in the supply chain are expected to continue over the next few months, at least. Another way to mitigate the impact this has on your project is to make decisions fast and early. If you need to move into the house by a certain date, it’s more important than ever to speed up those design and product selections.
While the market turns faster than the supply chain, there is some reprieve on the horizon. According to the Wall Street Journal, prices for two-by-fours surged in May 2021 to more than twice their previous record, set three years ago when there were about 15% fewer homes being built. Now wood prices have since plunged back to levels resembling those before lockdowns cut supplies short and boosted demand.
July futures ended late August 2021 at $521.40 per thousand board feet, down nearly 70% from the high of $1,711.20 hit in May 2021, when wood-product supply lines were still being unknotted after the lockdown and before Americans began to shift spending from home improvement projects to vacations and dining out. More actively traded futures for September 2021 delivery settled at $612, which is $27 below the pre-pandemic high. This decline will benefit contractors, their clients, and DIY’ers.
If you have been holding off on your custom home or custom remodel because you’ve been hearing about the volatility of the building industry supply chain – things are looking up! Contact Timber Ridge Properties to move forward on your project. Remember, working with a contractor or designer will make the process easier and more cost-effective.