How Rising Prices Have Impacted the Housing and Remodeling Industries

 Inflation has left its mark on many products and services that people buy every day. One sector that has been dramatically affected is the housing industry. Home prices have skyrocketed. In the last decade, prices have increased by nearly 50%. Signs of a slowdown have yet to be seen.

The Effect on Home Sellers and Buyers

Home sellers may be taken aback when they sell their houses. A real estate agent may list the property and find that the offers come pouring in immediately, sometimes on the same day. If the sellers thought they had more time, they might not have completed the mortgage loan process for their new home or made arrangements to move somewhere temporarily.

Currently, more people want to buy a home than there are available homes. When a home becomes available, buyers are eager to make offers, and the selling price is often much higher than the asking price. This scenario makes it difficult for homebuyers to afford a home. Furthermore, the price of building materials is increasing, leading to an uptick in the cost of building a new home.

The Effect on Renovation Expenses

The rise in housing prices has also affected the cost of home renovation. When homes are priced higher, the remodeling industry also sees increased costs. Several factors contribute to these spikes in pricing. Some of them have a domino effect on other things.

Labor Shortage

You may have heard in the news that many businesses are experiencing a labor shortage. “Help Wanted” signs abound everywhere. Many aspects have been touted as reasons for the lack of workers.

The pandemic led many people to revamp their working situations. Some were forced to stay home when their workplace closed. Others had to leave their jobs to care for children or family members. Some decided to retire earlier than planned. As people shifted from one working situation to another, they left behind empty positions, including skilled labor jobs.

Factory Closures

Many companies shut down during the pandemic. What was once expected to be a two-week closure turned into a lengthy lockdown that affects some places of business even today. Factories stopped making products and materials, leaving shortages that still cause problems in specific industries. Some of these products are:

  • Semiconductors
  • Garage doors
  • Computer chips
  • Lumber

With material shortages and order backlogs, building supplies are in higher demand and at a lower supply.

Backlogged Schedules

As workers and businesses try to emerge from the pandemic, projects on hold are now being revived. For months or even years, some people didn’t want outsiders in their houses due to the risk of spreading the virus. Now that fewer people are getting sick, customers are more comfortable opening their homes to workers. They may also be returning to work, leaving home offices that a remodeling project would have disrupted.

However, construction companies couldn’t afford to keep workers during the height of the pandemic. With no work to do, many businesses laid off their employees temporarily or permanently. This situation created a greater shortage of skilled laborers available to do remodeling and construction work. As contractors try to keep up with the increase in demand, remodeling projects can be more costly.

Shipping Delays

All of these shortages really show the domino effect of shipping delays. A lack of raw materials slows down factories, and then the factory slowdown causes back-ordered products and warehouses to have fewer products to sell and ship. The labor shortage affects all of these elements — there are fewer workers to produce raw materials, work in factories, stock shelves and deliver products.

The Bottom Line for Remodeling Projects

If you are planning to remodel your home soon, all of the elements mentioned above will affect your project. Fewer houses are on the market, and homebuyers aren’t always able to pay the price. New construction is expensive. You may experience delays due to the same factors — higher prices, labor shortages, fewer supplies and back-ordered items. Be sure to do lots of planning before tackling your next remodeling project.

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