Why home renovations could get more expensive this year

Home renovation projects could get more expensive this year, according to a survey conducted by home remodel and design website Houzz.

The ongoing tight labor market and increasing material costs are behind that trend, say many of the 3,378 U.S. residential renovation and design businesses that Houzz surveyed.

“With market fundamentals aligned in favor of the home improvement industry, 2018 is set to be another great year,” said Nino Sitchinava, principal economist at Houzz, in a news release about the study. “That said, businesses are cautious about tightening local labor markets that may hamper growth in many regions, and apparent economic uncertainty on a national level.”

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Half or more of the architects, general contractors, design-build firms and landscaping professionals surveyed by Houzz expect that the problem of finding workers and the costs of paying them to increase in 2018, following what has been a trend for the last couple years.

On top of the labor costs, one in two companies in each of the groups surveyed — architects, interior designers, general contractors, design-build firms, renovation firms, landscaping and decorating —- expects product and material costs to rise, driving up the overall costs of doing business in 2018.

Other research supports that. According to LegalShield Housing Activity Index, worsening trade relations could also have an impact on building costs.

“The price of framing lumber has risen over 40 percent from a year ago due to import tariffs, while confrontations with key U.S. trading partners, particularly China, have also led to increased costs for steel and aluminum,” said James Rosseau, LegalShield’s chief commercial officer, in a news release, adding that rising interest rates are another cause for concern.

Still, after a strong 2017, the Houzz survey shows, companies are optimistic about revenue growth in 2018 and about two-thirds expect demand for their services to improve this year.

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Source:: The Mercury News – Lifestyle


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