Brian Mingham Discusses If the Costs of Home Renovations Are Increasing?

Brian Mingham Explains How the COVID-19 Pandemic is Affecting the Price of Household Improvements and Overhauls

In the early days of the COVID-19 pandemic, as stock markets tumbled, companies panicked, and the global economy teetered on the brink of collapse, it could be argued that initiating a home renovation might be an incredibly smart move. After all, Brian Mingham says history teaches that every crisis is also an opportunity. However, then came the lock downs. All businesses but those deemed to be the most essential had to cease operations. After a few tedious months, local and state governments across the country began to reopen their economies, and the construction industry led the way.

Now, as 2020 winds to a close, the situation regarding home renovations has changed dramatically. Whereas contractors were desperate for work in the spring, they are now overbooked in the autumn, and homeowners who have managed to procure their services have noticed a steep increase in prices. But is this merely a misconception, powered by a wave of anecdotal evidence? Are the overall costs of home renovations actually rising? The short answer is yes. The long answer is yes, but the reasons why are complicated.

Factoring in Price Adjustments for Dormant Months

According to Brian Mingham, the CEO of CFSI Loan Management, “One of the major factors at play in the climbing costs of home remodeling is the fact that contractors are trying to offset the supremely unprofitable early months of the pandemic. Depending on the state and area in question, from approximately March to May there was a government-mandated work stoppage wherein not only could contractors not take on any new jobs, they couldn’t even finish the jobs that were already underway. Adding to the financial strain, those dormant and unprofitable months are normally some of the busiest and most profitable months for home renovating companies. So, simply put, one of the reasons for the general price increases in home renovations is that contractors are trying to make up for lost ground.”

Factoring in Pandemic-Related Operational Expenses

Additionally, there are some immediate business costs resulting from the spread of COVID-19 that contractors must take into account, such as personal protective equipment. Although it may not seem like much more than donning face masks to an outside observer, Brian Mingham says a number of extra steps have to be taken in order to limit potential contamination when working in someone else’s home. Also making an impact on 2020 pricing is the disruption in labor caused by the virus. The fact that employees can, at any time and with little warning, fall ill and be forced to self-isolate for two weeks can throw a contracting business into disarray, prompting a scramble for capable freelance or temporary workers who often charge more for their services. These costs are ultimately passed on to the customer.

Factoring in the Scarcity of Certain Materials

“Supply chains are doing their best to answer the challenges posed by the pandemic, but the scarcity of certain critical building materials remains a real problem for the home renovation sector” states Mingham. “Materials such as steel, concrete, and lumber remain in short supply, making the renovation process inevitably slower and significantly more expensive.”

Factoring in the Economic Forces of Supply and Demand

Fueling the demand for contractors in recent months has been an increased push by urbanites and suburbanites alike to relocate to less densely populated areas. This is undoubtedly a response to the high transmission rates of COVID-19 in large cities and their outlying commuter burghs. As such, a great many homeowners want to start renovations, Brian Mingham says it’s likely in an effort to make their house more appealing for sale on the real estate market. Consequently, at this point, there are far more homeowners trying to remodel their homes than there are competent remodeling companies. Following the basic economic principals of supply and demand, firms that specialize in household renovations — especially the reliable and reputable ones — have adjusted their prices to take advantage this trend.

So, are the costs of home renovations increasing? Yes. Is it because of the pandemic? Once again, yes. Will contractor prices fall back down to Earth once the virus runs its course and life returns to some semblance of normalcy? Although that is more difficult to foresee, the answer is probably, after factoring in inflation… and even then, perhaps not all the way.