Typically, when new home sales decline home renovations rise. This theory proved true last year and, according to Angi, the average cost per project was $8,484. Even though new home sales are predicted to decline again this year, will an increase in renovations be seen?
Many homeowners pay for home improvements by refinancing or taking out a home equity line of credit, but current mortgage rates make that option unappealing. Of course, there are credit cards that offer new clients 0% for 12 months. But with the higher cost of living affecting what the average American can save for a rainy day, paying for renovations by credit card may be a financial mistake waiting to happen.
Construction costs are higher because of increased wages for skilled laborers as well as a shortage of workers. The National Association of Homebuilders (NAHB) says the cost of lumber is increasing again due to demand and ongoing supply chain issues. And, of course, delayed timelines have become the norm since Covid.
Last year these problems existed but according to Nationwide 71% of homeowners surveyed didn’t care. They planned home improvement projects and paid the higher prices to get the work completed, and they waited a long time for projects to be completed.
If the CBRE is correct then waiting until late summer or early fall of this year to begin renovation planning would be a smart move. Homeowners who don’t care what things cost and don’t want to wait should consider hiring a construction law attorney to negotiate and oversee contracts before agreeing to having work done. This way your best interests will be protected, and you’ll have someone to prevent additional charges from being assessed during the build phase.