How to Avoid Sticker Shock on Home Renovation Costs

2021 saw shortages in products across the board, however, none was more serious than the home remodeling supply and material shortages experiences by home owners and builders simultaneously.  Budgeting for updates and projects has become highly unpredictable, and, many builders and homeowners are getting sticker shock, or having to make suitable substitutions to finish their projects.

Buyers and Homeowners typically underestimate costs, HomeAdvisor has found in their survey of over 900 consumers.  In their consumer study they found homeowners underestimated their paint costs by 50%.  DIY costs will differ in price from professional costs so, plan on getting estimates to stay on budget.

Recently, one of our clients purchased a new townhome from an independent builder, and, during construction, there was a shortage of drywall, so, the builder substituted a firewall material in place of the typical drywall so as not to hold up the project.  The next segment of the new construction project went up $50,000 in price, for the same unit, due to the unpredictable prices and supply issues.

A gas insert was ordered when the purchase agreement was signed for this same unit, however, a week prior to closing there still was no fireplace delivery, and, the replacement fireplace took 4 months to finalize, as, people were unavailable to install or inspect due to Covid, and the need for quarantine, once a Covid diagnosis was made.  The property closed at the end of August, however, the fireplace wasn’t completely installed and finally approved until just prior to Christmas.

If you are just looking to paint or replace flooring, you will likely fare better, however, don’t get locked into one color choice, as sometimes supplies are insufficient to do a whole project and you may need to make a secondary choice, especially with countertops, flooring or tile.  Be sure to get costs estimated by professionals before you order and make sure you can get all the materials to cover in the same color lot so as not to run out prior to finishing the work.  Make sure to consider if you have a running or repeating pattern as well.

Landscaping costs are the most underestimated costs according to their survey.  25% of the respondents surveyed admitted they underestimated their landscaping costs by 67%.  Purchasing landscaping materials can easily add up, a single tree can cost between $150-$300, however, the price per tree may drop if multiple trees are being planted.  Getting estimates from the start will help you keep your costs in check and make realistic choices in your landscape budget.

Window installation is another area where, on average, 40% or more homeowners typically underestimate the cost.  Especially here in Minnesota, where Summers and Winters can really stress your cooling and heating budget, it’s important to have energy efficient windows.  Because of this more homeowners have chosen to upgrade windows in 2021 and costs have risen 5-10% because of this higher demand.

In 2020, during a repair job, a window was ordered by a professional installer for a homeowner in mid-August, but, due to delays in product availability, the window wasn’t delivered and installed until November the same year.  Our best advice is to plan way in advance when ordering new windows, get pricing nailed down early, and, anticipate delays in the process just in case.

When planning budgets for any project, it is recommended that Homeowners decide on a budget prior to starting projects and budget higher.  Material prices rose between 5-10% in 2021 for roofing, siding, installation, window installation and more.  When estimating costs for supplies and installation adding a pad of 5-10% to initial project estimates will help to offset future price fluctuations.

For first-time homeowners, be aware that if you are taking on larger projects, you need to be sure to follow your city and county code for renovation.  Don’t assume watching a DIY series or two will be sufficient to help you make it through.  Surprises are unwelcome but common, so, think twice if you are unsure and contact a professional.

Written by Claire Bastien for BuyersRealEstateGroup.com

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