Lumber Prices could easily be the latest Netflix special for how much we’ve talked about it over the last few months. If you’ve missed it, lumber prices are currently pricey; the cost of 1,000 board feet of lumber is above $1000, 2-5 times higher than what it would go for during pre-pandemic times. Nationwide, new home construction has cooled down despite high demand. Many families have shelved their new home dreams for now as they wait for lumber prices to come back down to a reasonable price.While most of the public conversation around lumber prices has focused on new construction, families looking to remodel are also trying to decide if it’s worth moving forward or if they should hold off. We’ll spend the rest of this blog post focusing on aspiring remodelers and how to strategically plan your project despite lumber uncertainty.
Most people agree that it’s a combination of a few things: when the pandemic hit last spring, many lumber mills shut down to slow the spread of COVID-19, and because they expected a big dip in demand. Instead, demand skyrocketed by the summer of 2020 and has remained consistent through May of 2021. Many families decided to take on DIY home improvements, hire a remodeling contractor for more ambitious projects, or build a completely new home.
As demand increased, supply decreased, leading to higher prices. On top of this, recent Canadian lumber tariffs and the uphill battle to rehire truck drivers and other supply chain professionals contribute to price increases.
As with most remodeling situations, it depends.
Home additions - room, second story, deck, etc. - are where you’ll see the biggest price increase. These projects are much more lumber-intensive than a kitchen or bathroom remodel.
Bathroom remodels will likely be the least affected by increased lumber prices. Other materials such as tile and flooring are also experiencing a price increase, albeit not as severe as lumber.
Kitchen remodels could see an increased price tag depending on the changes you are making. Custom cabinetry will be more expensive than usual, but creating an open concept kitchen and/or adjusting the layout will cost the same.
Allowances are used in remodeling proposals to provide a general estimate for the cost of materials (light fixtures, backsplash, countertops, etc). They are commonly used to mislead homeowners during the bidding phase. Dishonest contractors drive down their estimates by creating allowances with the cheapest materials in mind. Unfortunately, this often leads to multiple change orders and endless frustration down the road for the customer.
To avoid this, make sure you communicate your expectations and preferences with your contractor as early as possible. For example, if you know you want marble countertops and fancy light fixtures, tell your contractor this so they can account for it in the proposal (and so you can hold them accountable!)
That is good advice for homeowners in normal times. In uncertain times, when material prices are volatile and changing daily, it’s crucial to communicate with your contractor about how they’re creating the estimate and accounting for uncertainty.
A fixed-price contract is an agreement between contractor and homeowner that creates a solidified price tag for your project. The contractor creates a detailed proposal outlining the specifics of your project and tells you how much it will cost. Once you sign this contract, the cost is set in stone and can’t be changed.
Fixed-price contracts help protect you from price escalations throughout the project. When you sign a fixed-price contract, the contractor is responsible for securing the necessary materials and goods at the amount accounted for in the contract. Other remodeling contracts, such as cost-plus, tend to leave more wiggle room for contractors to increase the price tag midway through the project.
This advice is evergreen; however, there’s less room for error when times are uncertain. A quality remodeler will take the time to educate you on the circumstances, maximize your budget, help you understand where it makes sense to invest more and where it makes sense to choose a different product to cut costs.
The cost of lumber and other materials is changing every day. Recent news suggests that we’re trending back to pre-pandemic levels, but we can’t predict the future. The best way to handle this situation is to work with a reputable partner who can educate and guide you through these uncertain times.