Should You Wait to Renovate Your Home Amidst High Lumber Prices

The summer months are the ideal season for remodeling.  Long sunny days and warm weather are very beneficial when it comes to working outside, but before you book that contractor or take on that DIY project there is much more to consider when planning a renovation project than the temperature.  Knowing when to renovate your home and how demand and supply of material will save you money as well as time during your project. 

The Impact of the Pandemic

Within the last years, the pandemic caused a surge in home-improvement projects and many companies are still struggling to keep up with backlogs of projects.

Over 44% of home improvement plans in the US have been delayed due to supply shortages and skyrocketing material costs, according to data from market research firm, Cardify.ai.

Steve Cunningham the CEO of Cunningham Contracting and the chair of the National Association of Home Builders’ (NAHB) Remodelers Council said his projects are being delayed by months due to the limited availability of materials, as well as laborers, leaving many homeowners grappling with whether or not they should delay a project until next year.

The Cost of Lumber

One of the main materials contributors to the delays in projects is lumber. The price of lumber has more than doubled over the past year, and economists warn that things might stay this way for a while. In March 2020 , the price of lumber was $303.40 per thousand board feet.

That cost more than quintupled over the following 14 months, reaching a high of $1,607.50 this May before a drop to $741 in July. Market Insider data showed prices of lumber dropping about 5% week-over-week and  Monthly figures revealed a much larger descent at 45%, the worst monthly drop on record dating back to 1978.

The price of lumber affected my decision to move ahead with a renovation project recently. Have you ever hesitated to renovate your home?  In July of last year, I bought a ranch house with an unfinished basement. My goal was to finish the basement this summer and extend our living space. That plan was quickly shelved when the contractor gave me a quote for $25,000, which far exceeded my budget. I have decided to postpone that project for now, even as prices continue to fall.

Why is the Price of Lumber Dropping Now?

A number of factors are shaving hundreds of dollars off the wholesale price of softwood lumber. According to Dustin Jalbert, an analyst with Fastmarkets, the country turning the corner in the pandemic has meant that sawmills have been able to ramp up production and some people who had been working from home are returning to offices and other workplaces. Here are 4 reasons to delay renovation.

The recent fall in lumber has not given homeowners the all-clear to start their renovation; it is expected that it will take time for the cost savings to be felt.

1. Lumber Prices May Fall Further

Lumber prices fell off a cliff in June after climbing that mountain at a record-breaking rate during the pandemic. Despite the recent drop in prices, lumber still costs about 80% more now than it did before the pandemic and while they won’t likely return to pre-COVID times, they should at least drop further to a price tag more affordable than today’s high costs.

2. You Can Save More Money

It’s always a good idea to save up for cosmetic renovations and upgrades so that you can pay in cash. By waiting a few months to start the renovations, you give yourself more time to pile up money and avoid taking on debt. This will eliminate a lot of the financial stress associated with the project. If you postpone your renovation for a year, you can invest that money smartly. Put it in a high-yield savings account to accrue interest.

3. The Threat of COVID-19 Is Still Real

The threat of COVID-19 is still very real and even with the number of Americans being vaccinated continues to grow every day. The spread of coronavirus variants is threatening to fuel a “potential fourth surge of cases” in the US, holding off on renovations until next year will give you a little more comfort with contractors working in your home.

4. You Might Avoid an Impulse Buy

Give yourself a year to think about an area you would like to renovate. Having a mental checklist you can go through to ask yourself if the renovation is really needed. If you still want it and can see how it would improve your home value after a year, then you can see how it would fit in your budget. This will help you take some of the impulses out of it. 

Summary

Have you considered taking the time to renovate your home? There are plenty of reasons to take on a home renovation, from increasing property value to upgrading outdated fixtures. But renovations can go awry, and you could end up with a bad case of remodeler’s remorse.

Understanding supply and demand is one of the main factors in how much we pay for just about everything that is important in a renovation. The best time to remodel is not always when the price of these materials is at their lowest, but by planning your project well in advance, you may be able to accrue materials when they are at their cheapest and simply store them until you are ready to begin working on your home. 

Deciding to renovate your home can be stressful. To protect your mental health, expect everything to cost more and take longer especially during a pandemic. If the project beats your expectations, you’ll feel great.