What are three prices that are relevant to track right now?
– The price of lumber
– The price of a remodel
– The price of a home
All of these prices are connected to California’s housing market, our shortage of inventory, and how the backlog of units.
THE PRICE OF LUMBER: WOOD IS THE NEW GOLD
Has anybody seen the price of lumber in the headlines recently? Fortune magazine recently published an article: “Lumber Prices 2021 chart: Price of lumber up 193% — and about to spike even higher”.* Increased remodeling and builders starting developments that were put on pause during COVID are a couple of contributors to the increased cost of wood. The price of lumber hit an all-time high of $1,048 per thousand board feet on Friday April 9, 2021.
COVID AND THE RISE OF COVID
COVID led to an enormous increase in home remodeling projects. Stay-at-home orders forced Americans to use home as their school, office, gym, and more. Deck construction, landscaping, and fence construction have all increased as homeowners are enclosing backyards and creating an oasis escape on their lot.
“3 out of 4 homeowners whom Porch.com surveyed have completed a major project since the start of the COVID-19 pandemic,” reported NPR last October. “Homeowners younger than 40 are the most likely to have completed projects this year, though more than half of baby boomers have done home improvement work too.”**
A DIY project may cut down on the cost of hiring a contractor, but how much is the average remodeling project costing?
Remodels can vary by region, whether it is a full or partial house remodel, and the types of fixtures and materials used. A luxury remodel will have a higher cost per square foot that a more simple remodel. “For the average 2,500-square-foot home, a whole home renovation costs anywhere from $15,000 to $200,000.”
Have you completed a home improvement project since last March 2020 when the pandemic started?
What are some popular home improvement projects?
1. Patios, decks, and backyard renovations
2. Building a garden (raised garden boxes were a hot commodity)
3. Installing a pool
4. Remodeling a bathroom
5. Remodeling a kitchen
6. Converting a garage into a gym
THE PRICE OF A HOME IN CALIFORNIA
If you are considering selling this year and you have a remodeled backyard, office space, or have converted your garage into a home gym, just know that those are features that are popular with home buyers.
If you are considering buying this year and are debating whether you are looking at a turnkey home (at a premium) or buying a fixer-upper and paying for a remodel, then you may want to consider the true cost of a remodel. It doesn’t look like remodeling costs will go down — if the demand is still there — so a remodeled home may be more convenient and cost-effective for you.
But what is the typical California home selling for? The median sales price of an existing single family home in February 2021 was $699,000***. Even condos and townhouses are closing at $530,000 which indicates the high demand in the entry level price point.
Although there is not a metric for the median price of a turnkey home, depending on the price range and location of the home, the difference between an upgraded turnkey property and one that has deferred maintenance can be anywhere between $10,000 to $100,000+.