Home repair and renovation costs soared in 2021. They’ll climb even higher in 2022.
Just like home prices, expect costs of home repairs and renovations to be higher in 2022. But wait a minute, you might ask, “How can home prices be higher than the average +20% price hike we experienced nationwide in 2021?”
Skyrocketing home prices in 2021 were mainly caused by the confluence of three factors: historically low interest rates, allowing for more buying power: greater demand than supply — 30% fewer homes for sale in 2021 than in 2020; and higher costs of labor, materials and supplies.
And then you might ask again, “How can home repairs and renovations cost even more this year when repair and renovation costs spiked up more than +15-20% nationwide last year?”
Home repair and renovation costs soared for reasons similar to those for rising home prices, but the complete story around repair and renovation is even more multi-pronged and more complicated. Increases were primarily due to:
1. Consumers shifting their discretionary spending from entertainment and leisure services closed due to pandemic lockdowns to home maintenance and home renovation projects due to being “stuck” at home 24×7 and “noticing” what needed to be repaired, maintained and/or renovated.
2. Supply chain disruptions due to the COVID-19 virus and pandemic lockdowns.
3. Building and construction workers essentially took it on the chin during the Great Recession of 2008. According to Federal Reserve Economic Data (FRED), some 2.5M construction jobs have been lost since 2008 due to layoffs, retirements, and workers simply searching for greener pastures and more security. The continued onslaught of COVID-19 and its multiple variants have only contributed to the much pared-down employment levels among construction workers.
4. Pre-pandemic, the Trump Administration instituted stiff tariffs on construction supplies such as Canadian softwood lumber, raising them from 9% to 17%.
5. The Biden Administration rescinded that lumber tariff hike briefly in 2020, but since re-instituted it in late 2021. The result? An overall increase of +36% to new homes and renovation costs.
“ …[the] shift towards home being the center of our lives isn’t going away.” — Oisin Hanrahan, CEO, Angi’s (formerly Angie’s List)
Much like pandemic-2020, homeowners not only spent much of their time at home in 2021, they also spent more money investing in their homes. According to Angi’s (formerly Angie’s List) 2021 State of Home Spending Report, homeowners spent an average of +20%, year-to-year, or $15,680, on home improvement projects in 2021.
Oisin Hanrahan, Angi’s CEO, said that this increased spending on home improvements, repairs, maintenance and emergency repairs …….