What If I Wait?

By now we all know the effects the Covid Pandemic had on prices in the construction industry.  First lumber prices skyrocketed and everything else was soon to follow.  We often had clients ask if it would be beneficial to put a hold on their project until prices went back down.  While we obviously want clients to move forward now and not some time in the future, our standard answer used to be something along the lines of “if you wait, prices will most likely go down, but never back to the levels they were”.  Early on, this messaging backfired as lumber was the main construction component that went up in price, but we saw that as lumber started to slowly fall, everything else started to rise in price and often the savings in lumber pricing wasn’t enough to offset the rising prices for everything else. 

Four years later, the advice is much easier to give.  While prices do continue to rise for everything, construction materials have been relatively stable for the past year.  I say relative because there have always been and always will be fluctuations in pricing.  I still have a bad taste in my mouth from 15 years ago pricing out lumber for a new home build only to see the prices increase by $15k by the time we placed our framing package order.  Lesson learned.  We now have a pricing volatility clause in our contracts. 

My takeaway from the pricing having normalized for the most part is that no, waiting isn’t going to save any money.  The costs are always going to go up.  They are just going up at a slower rate now than 4 years ago.  The only benefit I could potentially see for waiting right now would be for interest rates to go down.  That’s anyone’s guess what will happen.  In all reality though, the rates seem high compared to 5 or even 10 years ago, but if you look back 20 years or more, the rates aren’t really anything out of the norm.  It’s all about perception.  Rates have been dropping and the general consensus seems to be that they will continue to do so.  However, they aren’t dropping back to where they were 2 years ago anytime soon.

Another way to look at it would be to step outside of the construction industry.  How much does a gallon of gas or milk or a carton of eggs compare to two years ago?  How much does it cost to take your family out to eat now compared to two years ago?  We all feel the pinch of inflation and the reality is that overall, those prices are never going back to where they were.  If they did, that could be a bad thing for the economy overall.  With prices of goods rising, and thus the cost of living, that also means wages will have to rise to keep up.  All the materials on site won’t do a bit of good without someone there to assemble them and their rates to do so are going to have to go up as well.

Should you wait to start your remodeling project or new home build?  At this point, I would say no.  Prices are only going to rise and interest rates don’t appear to be moving back to where everyone wishes they were.  If you want to do the build and can afford it, now is the time to get started.

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