Is Now the Time to Remodel?
2022 is proving tough for all aspects of home renovation, from hiring contractors, to buying supplies. Here’s what to expect if you’re getting ready to remodel.
With today’s runaway inflation and rising interest rates, it may seem like a good idea to put your remodeling plans on hold. Or, maybe not.
According to the Leading Indicator of Remodeling Activity (LIRA) by the Remodeling Futures Program at the Joint Center for Housing Studies of Harvard University, remodeling expenditures are expected to cool down from 17.4 percent in 2022 to 10.1 percent by Q2-2023, citing steep slowdowns in homebuilding, retail sales of building materials, and renovation permits. While that may appear ominous, researchers say remodeling expenditures should reach $450 billion, well above the five percent historical average.
As existing and new home sales decelerate, so will the need for contractors and materials. BusinessInsider.com reports that lumber prices are already down to $604.50 per thousand board feet in July 2022, falling 47% year-to-date, and 65% off from the 2021 high of $1,733 per thousand board feet. Inventories are starting to pile up at both sawmills and home improvement stores, making contractors more affordable and available. As the cost to build declines, inflationary pressures on the housing market should subside.
But as long as overall inflation is still a problem, the Federal Reserve will keep raising overnight borrowing rates to banks, increasing the likelihood of a recession. Economists polled by Bloomberg.com say that over the next 12 months, a mild, brief recession is 47.5% likely.
If you decide to remodel, it’s wise to stay in your home for at least five years to comfortably weather any housing market volatility.
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