Higher Costs Fail to Deter Home Remodelers

The cost and scarcity of building materials driving prices higher on remodeling projects hasn’t slowed work, construction contractors say.

In fact, remodeling work is better this year compared to 2020, says Joe Koch Jr., superintendent of Joe Koch Construction Inc. The Austintown company has 12 new house construction jobs and five remodeling additions with another 12 jobs in the pipeline and more to come, he says.

Meanwhile, a shortage of materials has driven the price for lumber up at least 120%, roofing up 25% and siding up another 25%, Koch says. And while that can make for more expensive projects and longer lead times, “It hasn’t scared too many people away so far,” he says.

According to Random Lengths, a provider of information for the wood products industry, the price for lumber per thousand board feet was $1,044 as of March 11. That’s up 188% since the start of the pandemic. The National Association of Home Builders estimates the higher cost adds at least $24,000 to the price of a typical new single-family house.

“The wildest part is it has not affected demand,” Koch says.

Builders chalk that up to two things. First, mortgage interest rates remain at historic lows, which has been a boon to the overall house construction industry. As of April 5, CNET reports the average 30-year fixed mortgage carries an interest rate of 3.27%, while the average 15-year mortgage has a rate of 2.51%.

That’s keeping customers engaged with wanting to build houses or additions, Koch says, because what isn’t spent on interest helps to cover the higher cost of the project.

“You have people who are building homes and who are selling homes at their highs. And those are appreciating along with the new housing,” he says. “So they’re not taking as much of a hit when they’re building a home.”

Homeowners are also ready to move forward on remodeling projects they’ve been sitting on throughout the last year. Compared to the uncertainty of the coronavirus pandemic, they’re more optimistic about the market as a whole.

“We went through some pretty turbulent times with COVID,” Koch says. “But the American people in general are resilient. And when they want something, they find a way to get it.”

Being stuck inside their homes for a year accelerates that trend, says Sam Pitzulo, owner of Sam Pitzulo Homes & Remodeling, Canfield. People want more space. So they’re remodeling kitchens or putting on additions.

Of the 31 years Pitzulo has been in business, 2017 through 2020 were four of his best, he says. He expects 2021 to be similar with just as many remodeling orders.

“People haven’t changed as far as any of that stuff goes,” he says. “People are doing just what they would normally do.”

This year, Pitzulo says he’s seeing more whole house remodels than ever before. Homeowners are paying anywhere from $100,000 to $500,000 to gut their entire homes and “take it down to the stud again,” he says.

Those customers are interested in making parts of their homes more open and luxurious, particularly the bathroom with free-standing tubs and high faucets and walk-in showers, he says. They want their house to be a home and “vacation spot” – as he puts it – all in one.

In some situations, he’ll recommend just building new, which costs less and has a quicker timeline, he says. “But if you like your house, your neighbors and your neighborhood and you don’t want to leave, it’s an option.”

Total remodels of first floors and basements are also popular, Koch says. Homeowners want more spaces for when family comes to visit. They also are retrofitting their homes to have a bedroom on the first floor in addition to the bedrooms upstairs.

Homeowners who took two or three vacations annually are cutting back so they can invest in basement entertainment space, he adds. Koch has five jobs upcoming to add a 13th course to customers’ basements.

Typically, basements are built with 12 courses – 8-inch cement block stacked by 12, minus floor joists and mortar.

“Adding a course means you’re adding another eight inches of headroom down in your basement,” he says. “It feels just as it would being upstairs.”

Customers like the durability of vinyl wood flooring, says Kyle Ellks. 

For a more economical upgrade with high return-on-investment, homeowners are having their floors redone, says Kyle Ellks, owner of Ellks Construction LLC. Demand is strong for flooring work, which is why Ellks recently opened a retail space at 39 N. Main St., Hubbard. In 2017, he launched his business after doing floor installations for big box retailers.

“I saw how much people wanted to redo their floors because they moved into a new house or they were trying to sell it. And the floor is the least expensive and best return on their investment,” he says. “The floor literally changes the whole aspect of the room.”

About 90% of his sales are vinyl tile or tile laminate, he says. Customers prefer vinyl wood planks to hardwood flooring, he says, because they are waterproof and won’t get damaged by kids or pets.

People can put their stimulus checks toward flooring rather than more expensive projects, such as remodeling their bathrooms. Ellks has gotten a few calls for bathroom remodeling jobs. But “bathrooms cost more than what people think,” he says.

Projects that require replacing the plumbing or tearing out drywall can run from $8,000 to $10,000 with materials, he says.

And while flooring materials are up 7% from last year, that hasn’t deterred his customers.

“It’s not impacting any of my business because people understand that I’m not price gouging and it’s all the industry. I can’t change it,” Ellks says.

All that being said, builders and remodelers agree without some kind of change to curb the price increases, the surge in business won’t last.

“That’s ultimately going to change, because the good times don’t roll forever,” Koch comments.

Materials shortages are, in part, stemming from issues with imports, Koch says. They’re compounded by the mills in the United States that produce materials not operating at full capacity, if at all.

Manufacturers of products made with chipped lumber, such as oriented strand board, or OSB, lack the glue to make it, says Bob Holmes, president and CEO of M.E. Supply in Columbiana. Builders who use OSB for sheeting under roofing shingles have switched to plywood, driving up the cost, he says.

“So now plywood is oversold. Once the dominoes start falling, they keep on falling,” he says. “If they don’t get this problem corrected, things will come to a halt.”

The company has been receiving calls for products from builders from Pittsburgh to Columbus, Holmes says. However, given the national situation with building materials, he says he’s giving priority to local customers who are primarily residential.

“As much as we’d love to help those people, local customers are a really big deal to us,” he says. “When things get this tough, frankly it’s a very easy decision for me to look out for our community and customers.”

If materials costs can get under control, “The future looks bright,” Holmes says. M.E. Supply has construction projects of its own, including 12 new builds in the pipeline and six or seven extensive remodeling projects, he says. Popular trends he’s seen include bigger kitchens, open format spaces and “a lot of hardwood flooring,” he says.

New construction in Columbiana is strong as well, according to Holmes. Since the Community Reinvestment Area legislation was enacted in September 2018, Columbiana is “on fire,” with more houses being built in the city over the last 3½ years than in the previous decade, he says. “I don’t expect this trend to change any time soon.”

Pictured at top: Covered patios are popular additions, says Joe Koch Jr. His dog, Wynn, agrees.