Overcoming The Challenges of Rising Costs When Remodeling

In the best of times, a home remodeling project can be challenging. From finding the funding to living through construction, remodeling can be daunting. Add in an environment of rising costs, and it might seem impossible.

The good news? Nothing could be further from the truth! With planning and a little flexibility, it can not only be done, but it can also be what you have been dreaming about. While it can feel a little daunting when quotes come in higher than you expected or prices rise during your project, it can be done.

Read on to learn how to deal with rising materials and product costs during your home remodeling project and ways to mitigate costs.

A Wrench in the Process

The pandemic's arrival in 2020 affected the entire remodeling industry. Demand was rising even as materials and labor shortages were growing more persistent. It created a traffic jam that we're still dealing with in 2022.

Remodeling will remain as expensive and stressful in 2023 as it has been since 2020. The Federal Reserve is expected to continue to raise rates a few more times before they are through. That drives up interest rates and material costs.

Finding a contractor and the materials you need for a remodel can be difficult as a homeowner. When you do, both might cost more than they did before the pandemic. Both workers and materials are in short supply. The construction industry has labor issues that predate the pandemic. In the past two years has gotten worse.

Supply chain issues rippled through many industries, including construction and a building material shortage are still causing prices to rise. Easing the supply chain issues could lower costs, but it may not happen for a while. Combine this with increased demand since 2020, and you have a perfect recipe for higher costs.

However, as interest rates increase, demand may taper off. While home prices are significantly higher, borrowing against increased value becomes less attractive as interest rates rise. Higher interest rates for homeowners interested in tapping equity for home remodeling could reduce demand.

Planning Your Home Remodeling Project

Even in today's challenging environment, there is little reason to delay your project, hoping it will be easier or cheaper in the next year. Rising rates can be a signal that starting your project sooner is the right choice if you are planning on financing your project.

The secret is to be flexible with your timeline and your choice of materials. You must be patient when working with contractors and getting on their schedule. Being flexible with when your project starts can help.

A delay can be the time to build savings. Paying all or part of your project costs in cash is often a better alternative than going into debt. It's an interest-free option! If you do choose to finance, look for the least expensive option. Right now, equity options often have single-digit percent interest rates. A home equity line of credit might be a good option for a project with a flexible timeline because you can draw on it when needed.

Significant increases in home values have raised the level of equity available to homeowners and will continue to support remodeling activity for the next couple of years.

Controlling Home Remodeling Costs as Prices Rise

Once you have secured financing, it's time to plan your project. There are several ways to control project costs in an environment of rising prices. Here are some options to consider when planning your home remodeling project.

Choose Design-Build-Remodel

Working with a design-build-remodeling firm can help you to get accurate price estimates during the initial design phase. Taking architect-designed plans to a contractor can result in sticker shock when you realize that building costs are higher than expected.

Avoid Change Orders

Make decisions when designing your project and stick with them! Change orders can increase costs and cause delays.

Sign a Fixed-Price Contractor

Choose a design-build firm that can offer you a fixed-price contract so you aren't surprised by increasing costs during construction.

Work With An Interior Designer

An experienced designer can maximize the use and aesthetics of materials and finishes that will provide an affordable high-end look, with judicious use of higher-end materials.

Combine Projects

If you can afford it, combining projects may make economic sense. For example, if you are remodeling the master bath, consider including the guest bath or powder room simultaneously.

Be Careful With Low Ball Bids

A remodeler might come to your house and give you a lowball estimate for the work, but with no guarantee that it's what you'll pay before you're done. Do your due diligence! It's very difficult (and expensive) to switch contractors mid-project. Get and check references, and make sure your contractor understands your needs, budget, and lifestyle.

Plan and Be Flexible When Home Remodeling

With planning, flexibility, and careful consideration of financing, now might be the perfect time to undertake the home remodeling project you've been considering. Do your due diligence to find and engage a design-build remodeler. They can help you with every aspect of your project, from design through construction. A good design-build firm can help you to plan your project, allocate your budget, and give you the professional results you seek.

If you're considering a home remodeling project and you live in the Madison, Wisconsin, area, call the experts at Degnan Design-Build-Remodel. We can help you plan your project and get the most for your budget. Let us help you to take your home to the next level of comfort and function! We're always happy to answer your questions if you'd like to know more.