As we begin to move away from the worst of the coronavirus pandemic, the demand for home renovations continues to rise. Especially as we get closer to spring, you’ll see and hear much more about home remodeling projects. With longer days and better weather, it’s much easier for construction companies to keep their crews on schedule, especially with outdoor work
Nevertheless, several factors are complicating things as the industry struggles for normalcy. Both supply chain delays and spiraling costs have made things difficult for the industry and homeowners. In addition to a shortage of materials, the industry is also experiencing an unprecedented shortage of labor. While people expect industry growth to continue in 2022, optimistic predictions must be tempered by these challenges to the status quo.
With every home renovation project nowadays, a shortage of materials is a topic of discussion. Whether it’s lumber or steel or glue, remodeling contractors have to forecast weeks and months ahead to ensure that they have what they need. Many construction companies now order materials in bulk and keep them on-site longer to make sure they have product when the time comes.
The supply shortage appears to be a direct consequence of the pandemic. As factory work abated around the globe during the peak of the coronavirus outbreak, material transportation experienced lengthy delays. Because the U.S. imports almost 30% of its construction supplies from China, the epicenter of the pandemic, the building industry was bound to suffer the consequences.
from January 2021 to January 2022, according to an analysis by the Associated General Contractors of America, prices of construction materials jumped by over 20 percent. In the summer of 2020, for example, lumber prices started to rise as Americans moored to their homes turned to remodeling projects as a way to occupy their time. Nearly a year later, lumber prices almost tripled their pre-pandemic high. Unfortunately, there doesn’t seem to be much relief in sight so far in 2022.
A shortage of materials, however, isn’t the worst of the construction industry’s woes. In fact, a shortage of labor caused more project delays last year than supply chain issues. To add insult to injury, this lack of manpower is expected to get worse throughout 2022.
This industry labor shortage didn’t start with Covid, however. From 2015 through 2019, the amount of open construction jobs in the U.S. doubled to 300,000. Although the industry was one of the quickest to bounce back from the pandemic, its numbers still lag far behind the demand.
One of the reasons is that many tradespeople are approaching retirement without younger workers coming in to take their place. Indeed, the average age of a plumber or electrician is just under 60 years old while the average retirement age in the U.S. is around 62.
Despite the Covid-19 pandemic and labor and material shortages, the construction industry keeps humming along. In fact, home improvement projects have kept up at a rate that is higher than ever.
Indeed, a recent study at Harvard University showed that 2020 broke records for home improvements. It should come as no surprise, however, that the bulk of renovations focused on updating the inside of homes instead of outside projects like landscape lighting. Nevertheless, 2021 wasn’t much different as spending on renovations continued to increase. Moreover, it is forecasted to remain high through the middle of this year.
What’s even more astonishing is the U.S. spent approximately spent $100 million less on foreign materials in 2020 than in 2018. Because of the pandemic, we had to rely far more on American-made construction materials, which simply weren’t sufficient.
Thus, the industry must continue to cope with a situation in which the demand for home renovations remains high while the availability of supplies and labor remains low. Apparently, homeowners who were kept inside for so long have decided that having an updated, comfortable home is still a top priority, regardless of the costs.
And we should look for the trend to continue throughout 2022 as homeowners increase budgets and the scope of work for home renovations they regard as a worthwhile investment.