When Will the Cost of Lumber Go Down?
The pandemic home renovation boom has boosted the cost of lumber to record highs, leaving those remodeling wondering if they should change renovation plans this year.May 10, 2021 • Kira Barrett
If you’re renovating your home, you’ve probably been impacted by the record high price of lumber. Over the last year, the cost of lumber has increased by 377%.
Lumber is in such short supply that it’s caused widespread delays and panic for homeowners planning renovation projects and building homes.
If you’re considering a renovation project, whether you’re still daydreaming, getting quotes, or approaching demo day, you may be wondering: how will the cost of lumber affect my remodel? Should I wait? When will prices go down?
Read on to find out how you can ride this lumber wave and emerge with a renovated home, relatively unscathed.
Why Are Lumber Prices So High?
Unless you lack a connection to the internet (which we’d assume isn’t the case, considering you’re here reading this) you’ve probably seen the widespread panic surrounding record-high lumber prices.
The surge in lumber prices started with an unexpected increase in demand for lumber during the 2020 pandemic, mostly because of home renovation projects.
When the pandemic began in 2020, lumber producers expected a slowdown due to the loss of jobs and economic shutdown. But the opposite occurred in the home renovation market - when people finally had a chance to stay put in their homes for a spell, many noticed flaws for the first time and decided to fix them.
Homeowners started building decks, additions, and other projects, all involving lumber, at an increased rate. Lumber producers were not prepared.
Therefore, a shortage began, and it’s only continued to worsen during the spring 2021 renovation season when projects normally heat up.
Contractors, builders and DIYers are struggling to not only get the wood they’d prefer, but any wood at all - causing major delays. The only way to slightly remedy this? Putting the cost on the consumer: you.
How Do Lumber Prices Affect Renovation Cost?
Many homeowners that got estimates from contractors and builders in 2020 or even early 2021 are being told that the numbers aren’t accurate anymore because of increased material prices.
A homeowner getting a quote for a new fence may circle back three weeks later and find that the total cost from the contractor has increased by $1,000 or $2,000.
For larger home remodels, RenoFi’s main project type, the price difference due to the lumber price surge can be much more drastic.
Homeowners who’ve been waiting for the right time to renovate may be reconsidering their projects based on what they’re reading about increased costs and delays.
When Will Lumber Prices Go Down?
While experts can’t predict the exact week, month or quarter prices will go down, it’s safe to say that delays and increased costs are here to stay for the immediate foreseeable future.
Some hope that things will stabilize in the fall or winter, while others say next year. Every expert has a different opinion.
The answer to this question hinges on whether lumber manufacturers and supply chains can kick into high gear to meet increased demand, or whether we’ll continue to see decreased desire for renovations among homeowners due to these prices.
Should You Renovate in 2021?
That brings us to the big question: should you renovate in 2021? Many homeowners are grappling with this question as delaying a project could mean lower costs next year.
However, that’s not necessarily an accurate assumption. Some experts are predicting higher lumber prices until the end of 2022, which means if you’re looking to renovate your home or start a project ASAP, you could be waiting for several years, not one year.
Also, it’s quite possible that the renovation boom will slow down this summer as folks spend more on travel and other activities that were shut down in 2020 and spend less time in their homes.
Predictions aside, it’s a personal decision based on how time sensitive your project is and how much that drop in lumber prices could affect your overall cost. Lumber prices are not just experiencing typical fluctuations, they have skyrocketed to record highs. If current prices give you pause, you’re certainly not alone.
One important thing to note is that if you are planning on renovating now, expect delays with lumber and other materials. Your bar stools might take an extra six weeks, or the start of your project could be pushed by multiple months.
If you choose to wait until 2022 to renovate, don’t expect to hit the ground running with financing or construction. The process will probably still be slow. You should apply for a loan, find a contractor, get permits, plans, etc. well in advance - which could mean starting the process in 2021 for a 2022 construction.
The estimates for lumber price drops are just that - estimates - and it’s difficult to predict when and just how much. The renovation market is always changing and fluctuating, so while lumber prices might be lower, material or labor costs in other areas could be higher when you decide to step on the gas.
How RenoFi Can Help During Lumber Shortage and Renovation Boom
RenoFi has created unique home equity loan and HELOC products that give homeowners more borrowing power for major renovation projects.
RenoFi’s renovation preparation can help homeowners in all stages of the renovation process - from daydreaming, to planning, to getting ready to start - in evaluating their project during this lumber pricing surge.
These are the biggest ways that working with RenoFi can help you emerge from this lumber price surge unscathed:
1. Budget Buffer
First and foremost, RenoFi’s loan products provide borrowing power for home renovations. While every homeowner renovating should have a healthy budget cost buffer, with unexpected material cost fluctuations, many homeowners might want to keep a larger buffer than normal.
The average RenoFi homeowner borrows around $150,000 with a RenoFi Loan or HELOC, and the maximum loan amount for qualified borrowers is $500,000.
If you’re a homeowner that’s now feeling uncertain about the money you’ve saved for a renovation based on the current market, it might be time to look into a RenoFi Loan.
RenoFi Loans offer 11x the borrowing power on average compared to traditional home equity loans, so they’re the perfect option to finance projects when costs are higher than normal.
To see how much you could borrow, check out the RenoFi Loan Calculator .
2. Feasibility Analysis
RenoFi conducts a feasibility study on every project our homeowners bring to the table. This study involves analyzing the renovation plans and budget breakdown to determine whether the contractor’s quote is realistic and reasonable.
We conduct this analysis to make sure that homeowners won’t experience surprise cost increases during construction because initial estimates were too low, and to make sure homeowners aren’t being ripped off.
In regard to lumber specifically, our analysis includes the increased/volatile pricing and makes sure that it’s accounted for in the total budget.
Working with RenoFi ensures that despite market fluctuations, you’ll have enough money in your budget to complete your desired project, which is especially important during these lumber price highs.
How do I know if a RenoFi Loan is right for my project?
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