Home improvement is booming and the cost of materials is higher than ever
Contrary to the negative economic effects of the pandemic, more and more people are looking to buy or renovate their homes this year. This would generally be good news for entrepreneurs, but the disruption of the global supply chain makes it more expensive to complete these projects. Many homeowners have had to wait longer – and shell out more money – for their renovations.
“The cost of materials has skyrocketed… For some, that would take some out of the game. ”—Sam Knolton, Pinnacle Contractors
This problem is different for low-income homeowners, who are in desperate need of repairs to maintain their homes. If these families are excluded from the price due to high construction and material costs, they might not be able to solve big structural problems. There are resources to provide loans for these situations, but they are often not sufficient.
Listen: Why home renovations and purchases are skyrocketing and what it means to you.
Kermit baker is a senior researcher at the Joint Center for Housing Studies at Harvard University. He says the setbacks in renovations are fueled by global factors. “The cost of wood has tripled in the last three months… We see many markets being slowed down by fundamental issues in the supply chain.” He says these delays and high costs have different effects for low-income homeowners seeking repairs. “We still have a lot of households that are not doing very well financially… 40% of homeowners say they have lost income… 10% say they are behind on mortgage payments.
Baker says the supply chain isn’t the only factor in the renovation setback. “About 30% of workers in the construction industry are immigrants or were born abroad. Construction comes just after agriculture in terms of immigration dependency. So if immigration is not dealt with quickly, it will be a big problem. “The increased demand for home improvement projects is overwhelming some businesses.“ I think a lot of entrepreneurs who were hoping for a really strong market are hoping for something a little less strong so that they can run their projects in a more manageable way, ”he says.
Sam knolton is the owner of Pinnacle Contractors in the Detroit Metro, with 35 years of experience in the construction industry. He says even simple building materials, which were previously inexpensive, have nearly tripled in price. “The cost of materials has skyrocketed … For some, that would take some out of the game.” Because of these high prices, Knolton says customers have to wait longer for their renovations. “I have a few clients right now who are really mad at me even today.”
Knolton says these setbacks have changed the way he does business. “I give myself more grace. For example, I manage customer expectations… I prefer to under-promise and over-deliver to survive this situation. Despite rising material costs, Knolton says he’s trying to keep prices reasonable. “I really want to honor the awards… for me not being able to make a door because a grandmother can’t afford it, that’s a problem for me.
Pat cooney is Assistant Director of Economic Mobility at Poverty Solutions at the University of Michigan. He says renovations are more crucial for low-income families with older homes. “Property taxes and home repairs are the main challenge in maintaining the stability of many of these households.” When renovation costs rise, Cooney says these homeowners are often overlooked. “Low-income homeowners are kind of left out of this market… traditional lending tools are often out of reach due to home appraisals in Detroit neighborhoods.”
Cooney says low-income families need the ability to renovate their homes. “We believe that homeownership can be a real tool to achieve this stability… but the resources have to be provided.” He says the city of Detroit has a loan system in place for these households, but it is often insufficient. “The resources dedicated to this do not match the overall need.”