Timber costs have skyrocketed in the last year, giving budding home renovators a choice of whether to wait in the price purgatory or move forward and possibly overpay.
Lumberjacks falsely predicted that the housing market would collapse under the weight of the pandemic instead of booming as before, says David Logan, senior economist with the National Association of Home Builders.
This “fatal mistake,” as Logan calls it, created a mismatch between supply and demand, which, according to data from Fastmarkets Random Lengths, a specialist publication for the timber industry.
By mid-July, timber prices had only dropped to double their spring 2020 levels, but whether the decline will continue and when lower prices will hit homeowners is not yet clear, Logan says.
Here are tips to navigate a home remodeling when the wood costs are going through the roof.
CREATING ROOM FOR VARIABILITY
The recent drop in prices may seem like a positive sign, but Logan compares the dilemma of home remodeling to that of a homebuyer: There’s no telling when the time will be right.
“Trying to time the market is likely to cause more fear than knowing that you will get things going,” he says.
Logan says if he did a renovation, he would move on to a major renovation, like a kitchen upgrade or a room addition.
If a project requires months of planning and waiting, allow room for price and schedule changes in your contract, says Ethan Landis, principal at Landis Architects / Builders in Washington, DC. This way you won’t pay too much if prices drop before your contractor starts buying, but you can still hesitate if the project gets too expensive.
SEARCH FOR ALTERNATIVES, PLAN FOR SCARCE
If a little DIY or good to big update could wait a few months, Logan says he would take the risk and wait for wood to become more affordable.
“I know full well that by the time I do it, the prices could be higher,” he says.
In the meantime, look for recycled, reclaimed, or alternative materials.
Ty Lindgren, a shift supervisor at a food and beverage company in Olympia, Washington, brought back leftover wooden pallets from work to build a playhouse for his children.
He estimates the cost of the project was reduced from $ 1,000 to about $ 100 when the pallets were used in place of the high-priced two-by-four pallets.
If you don’t have access to additional unclaimed wood, you can buy it.
Habitat for Humanity’s ReStore has over 900 locations, many of which sell recycled wood or wood items that you can rehabilitate or turn into something like shelving. In some locations, you can search your inventory online.
Your local wood or flooring liquidator may have enough wood to renew the flooring in a small room or on a single floor of your home, says Rebekah Hernandez, a Dallas-based interior designer.
“You can’t be choosy because there aren’t many options, but they are out there,” she says.
If you decide to postpone the project to wait for lower prices or to save, Hernandez says small changes like a new rug, decorative pillows, and updated art may do for the time being.
“All of these things, while subtle and minor changes, ultimately help make you feel happier and better in your space,” she says.
A renovation out of pocket is always the cheapest way. But only fund the project if you can get a low interest rate and affordable monthly payments, says Larry Pershing, a Chicago-based certified financial planner.
Pershing says home equity lines of credit have low interest rates and you can typically withdraw the money over a 10 year period. That means you can borrow as much as you need, up to your limit, whenever you need it when a large project has unpredictable costs and schedules.
An FHA 203 (k) loan enables home buyers to combine the cost of a fixer upper and renovations into a single mortgage. Pershing recommends them for homebuyers who do not already have a lot of equity.
A home finance loan provides project funding quickly, and you can often pre-qualify to estimate your monthly payments and interest costs.
With a flat rate loan like a personal loan, try to keep an eye on a final price. If wood prices go up, you can’t go back and borrow again.