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Construction and remodeling costs are through the roof – what is happening?

If you are like many homeowners, this last year has given you a case of “renovation fever.”  With most of us spending most of our time at home, we can’t help but notice all the things that we’ve always wanted to change and update. There seems to be no end to our project list.

However, if you have been considering a major design project or home renovation, you might want to hold off for a bit.

You might be thinking, wait… what? Allison, are you turning away projects? Are you telling me that you don’t want to help me get the kitchen/great room/primary bedroom suite of my dreams?

Well, no, not exactly.

However, many clients that I have met with recently have been caught by surprise by construction costs, and disappointed to learn that the budget they had in mind will not stretch as far as they thought.

With this article, I want to arm you with information so you can make the best decision for you regarding a potential remodel or design project. No surprises!

Why Are Construction Costs So High?

Unanticipated changes and trends over the last year are driving costs up to levels that we have not seen recently. I am sure you’ve heard a lot about lumber prices, but it’s not just materials that are expensive. Labor is too.

Contractors as Essential

At the start of the pandemic, contractors were deemed “essential businesses” in Oregon, meaning they could continue to work. This was great news, but the problem was that we were already suffering from a shortage of qualified construction professionals.

The 2008 recession wiped out a lot of the more experienced contractors. Folks that had been in business for decades took the opportunity to retire, rather than trudge through a recession. In their place, a new, up-and-coming generation of contractors popped up.

While skilled at their crafts, many of these younger businesses are simply untested and unexperienced on the business side of things. They have not had to navigate difficult waters like recessions, pandemics, supply issues, and high demand. They have struggled to manage the enormous demand for their services.

Increased Demand for Materials & Labor

Because of the hot real estate market, more people are opting to stay put and renovate instead of move. This has contributed to a classic supply-and-demand issue. When the demand for contractors and materials high, prices naturally go up to compensate.

In addition, there is a shortage of certain materials, like lumber. At the beginning of the pandemic, sawmills stood idle as the country shut down. As homeowners grew bored, they sought out DIY projects, snapping up materials that were not being replenished at equivalent levels. Low interest rates also encouraged a housing boom, which led to… you guessed it: more demand for forest products.

These high costs can make large projects less attractive (for now).

Should You Go for Interior Design Right Now?

Given what you now know about costs, is embarking on a large interior design project the best thing for you right now? Of course, this is more than a simple yes or no. When deciding whether to move forward, here are some things to consider:

  1. Have realistic expectations. Know that your budget will not go as far as you originally thought it would. To accommodate for labor and material shortages, you may need to increase your budget or dial back your plans.
  2. Do your interior design project in phases. We get it: you want what you want! We can help you chunk out your project and decide what to do now and what to do later so you can be smart with your budget.
  3. Wait, if you can. $125k is a lot of money for the remodel of your dreams… in the future. The market will correct eventually, as it always does. If you can afford to wait (we know, its so hard!), then maybe waiting is the best option for you.
  4. Go for less expensive updates. Instead of taking things down to the studs, would new paint, décor or furniture give you the fresh space you are craving? We can help you create rooms you love, without major construction costs.

ASD is the Project Manager NOT General Contractor

Every interior designer does things a little different, but here at Allison Smith Design, we act as a project manager vs. a general contractor, which can save you a lot of money.

Approaching a general contractor

Often when you approach a general contractor about a project, say, a kitchen remodel, you provide the budget and an idea of what you want, and they will give you a lump sum of what they can do for you. General contractors make their money by marking up the labor for the various companies they contract the different jobs out to. They may use the materials as an area to save money, and you don’t end up knowing really how much things cost.

The benefits of ASD as a project manager

We act as a project manager, not a general contractor. We create the design, specify the products, and keep your project on schedule, without marking up the labor. When we give you a proposal for your project, we provide everything as an individual line item, so you know exactly what you are getting and where your money is going.

Knowing what you know now, are you ready to start your project? We would be thrilled to help, whether you decide to refresh with custom furniture, or embark on a major remodel. Contact us today for a quote!