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When the COVID-19 pandemic and subsequent statewide shutdowns sent us into our homes last spring, millions of Americans turned their attention and energy to improving the homes they were suddenly spending much more time in.
According to BusinessWire, “Home centers, hardware stores, garden centers, and building materials suppliers realized a year-over-year sales increase of 22.6% [in 2020], leading all retail categories except online purchases. In terms of consumer attitudes and behavior, there has never been a single force that has so significantly shaped the home improvement market.”
If you’ve decided to invest in renovating your space this year, we’ve got you covered! Check out these six steps to help your project go smoothly:
1. Be Aware of Rising Costs for Construction Materials
When the pandemic began in March 2020, the production and construction of many key materials, like lumber and steel, slowed to a near standstill. With millions of Americans working from home, many finally had the opportunity to work on home renovation projects. Historically low interest rates prompted higher home sales, which also leads to increased demand for construction materials.
Consider the following statistics from ConstructionDive:
- Prices of both lumber and steel—two primary building materials—have surged anywhere from 20% to 25% recently.
- Over the past year, the price of softwood lumber spiked 73%
- Iron and steel scrap has surged 50.8% since February 2020
- One home builder in Alabama reported that the price of a lumber framing package on an identically sized home had more than doubled over the past year, from $35,000 to $71,000
2. Vet Multiple Contractors Before Hiring
Experts recommend bringing in three to four contractors and getting estimates from each one. While it’s tempting to go with the cheapest contractor, don’t let that be your sole hiring factor. With plenty of contractors available for work, it’s safe to say there are many who will quote a low bid to secure a job, but might be inexperienced or provide low-quality work.
Be sure to also ask for contractor recommendations from your neighbors and friends to find out if customers are happy with the finished product.
3. Set a Budget—But Allow for Flexibility
It’s always safe and smart to have money set aside for unexpected costs that can arise during a renovation. Unforeseen issues like dry rot, a bad roof, etc. can cause a hit to your budget and possibly bring your progress to a halt.
A good rule of thumb is to set aside 10-15% more money than your renovation estimate in a contingency fund. If you come across any issues, you’ll be prepared; if you don’t have any surprises, you now have some extra cash back in your pocket!
4. Communicate with Everyone Involved
In order to avoid design mistakes, budget overruns, or time delays, communication with your contractor and their team is crucial. Depending on the size of your renovation, the stress of making a ton of big and small decisions will become overwhelming and confusing.
Maintaining that open line of communication and understanding with your contractor will lessen the stress and make for a smoother project.
5. Make Realistic Design Choices
Browsing for materials like flooring, tile, and countertops is an exciting and creative moment when putting together the details of your home. With thousands of options to choose from, you can count on finding items you truly love that fit within your budget. When picking out these items, it’s essential to consider the daily wear and tear these materials will face.
For example, hardwood floors are beautiful, but they’re not practical for everyone. Pets and young children can cause scratches and damage to a hardwood floor, prompting a replacement within a few years. For a more active family, laminate wood floors would be the better choice. They look exactly like wood and are a lot more durable, plus laminate is typically less expensive than traditional hardwood. Weighing the pros and cons of selecting certain materials for your home can save you valuable money in the long run.
6. Use a Separate Bank Account for Your Budget
Many professionals recommend homeowners have a separate bank account for their renovation money. This allows you to stay organized and makes it easier to track spending. You’ll save plenty of time by not having to comb through Target and fast food runs to find your renovation transactions!
If you do have a separate account for your renovation, it’s still important to keep all of your physical receipts. This will assist you when it comes time to calculate the market value of your home.
From whole house remodels to a single bathroom or kitchen, there's no better feeling than walking through a completed project! If a home renovation sounds like a dream, consider financing options to help you see it through. You don't have to have a lump of cash on hand or max out your credit cards to get the kitchen you've always wanted. There are renovation loan options available that allow you to refinance your home and add the cost of the kitchen (or any other) renovation to the loan balance.
Now that you’ve read up on a few essential recommendations for your renovation project, it’s time to get started. Remember to incorporate these helpful tips into your project plan for a successful outcome!
Based in Dallas, Jeremy Radcliffe is a Senior Mortgage Banker for SWBC Mortgage. Jeremy works with his clients to explore their options and help them find a home loan they’ll feel great about.