Home improvement projects are never inexpensive. But the recent surge in lumber prices is making that fact particularly painful.
Because of a timber shortage, a simple 2×4 now costs more than a Chipotle burrito. That may seem trivial, but a year ago a 2×4 typically ran about $2 to $3. A Chipotle burrito today? Roughly $7, more with extra toppings.
You can get inventive and cut labor costs by doing the work yourself, yet you still need the wood. Some enterprising DIYers in Alaska are even milling their own lumber just to keep projects moving. That’s not a realistic option for most, but necessity breeds ingenuity.
Thomas Jepsen, founder and CEO of Passion Plans, a digital resource for house designs, blueprints and related materials, says the spike in costs has pushed the price of new single-family homes up by about $25,000. While expert estimates vary, most industry voices agree lumber prices have risen somewhere between 200% and 400%.
Lumber futures swung wildly in mid-May, and the elevated prices dampened demand. Still, there simply isn’t enough lumber available for many ongoing projects.
To understand what rising timber costs could mean for homeowners planning renovations and buyers considering new construction, we consulted industry professionals for their perspectives. Their advice often pointed to one conclusion: it might be prudent to delay renovations.
Why Are Lumber Prices So Elevated?
The climb in lumber prices has been driven in part by inspiration from popular home makeover shows and millennials purchasing older homes with ambitious plans to renovate. Spending more time at home during the pandemic — working, schooling and living — has also increased interest in home projects.
When Americans aren’t renovating, many are capitalizing on historically low interest rates and choosing to build their dream homes from the ground up instead.
But higher renovation and construction activity is only part of the story. Add in reduced lumber output because mills shut down due to quarantines and state orders, plus supply-chain disruptions. And that’s not all.
“Honestly, if I had to coin a phrase for this period, it would be ‘the perfect storm,’” Jepsen said, who has worked in home improvement for a decade. “The beetle infestation wreaked havoc in Canada, and everyone assumed the construction sector would slow with COVID, so supply was further constrained.”
Beetle infestation?
For years, Canada endured a massive outbreak of bark-eating pine beetles that decimated trees grown specifically for lumber. On top of that, British Columbia experienced increased wildfires around the same time.
Canada is the world’s second-largest softwood exporter, behind Russia, which moved into the top spot last year, according to International Forest Industries. The loss of forestry resources contributed to Canada slipping to No. 2.
“These are truly unprecedented times,” Jepsen added. “Many projects are being canceled or put on hold. I’ve seen large homes covered with tarps after contractors backed out of contracts that didn’t account for the potential surge in lumber costs.”
When Might Lumber Prices Decline?
What rises often falls. Except lumber prices — not so straightforward.
That doesn’t mean timber costs won’t ease at all.
“Lumber prices will come down,” Jepsen said. “Supply will recover, DIYers will return to offices, and things will somewhat normalize. Still, the impact of the beetle outbreak and increased wildfires from warmer conditions is real, so I don’t expect lumber to drop back to pre-COVID levels.”
Jepsen isn’t alone in this view. Most analysts believe prices will retreat to some extent, though they differ on timing (one analyst suggests 18 months; another predicts by this summer).
One consensus across forecasts: while prices may decline, we likely won’t see lumber return to its pre-pandemic pricing.
Ways to Save Money While Lumber Is Expensive
High timber prices don’t necessarily mean you must abandon plans for a new build or a renovation. You may simply need to alter your approach.
If you’re planning renovations, ask your contractor or architect to think outside the box.
“We’ve employed, and seen others use, creative methods to incorporate reclaimed wood where possible,” Jepsen said. “We’ve sourced a fair amount through Craigslist and by contacting parties when structures are demolished. Some of that material can be salvaged and reused.”
You might also focus on renovation projects that don’t rely on lumber, suggested Phillip Ash, founder of Pro Paint Corner.
“I recommend addressing bathroom upgrades during this period, or use the summer to work on landscaping to refresh your home’s exterior,” he advised. “One of the simplest and most transformative projects is repainting the interior or exterior of your house.”
Why Waiting to Renovate Might Be Smart
We purchased an older home last September and it has a daunting 30+ steps from the street to the front door. While the house is in reasonable condition, a roof deck carved from the attic in the ’90s has deteriorated.
Our plan was to remove all the rotted wood and rebuild the deck this spring. The estimated cost was about $15,000.
Now? Contractors are quoting $30,000 — and that doesn’t even account for the new grill I’d promised myself.
So we’ve opted to delay the project for at least a year and hope our feet don’t go through any decayed boards while enjoying the deck this season.
Jepsen believes that’s a sensible move, given not only the lumber shortage but also an alarming scarcity of appliances, rising steel costs, and elevated labor rates for in-demand contractors.
“Homeowners, when possible, would benefit from postponing renovations for a year, which should also help with appliance pricing,” he said. “I also anticipate that the labor shortage will ease as stimulus effects diminish.”
Jepsen’s counsel seems to align with how many homeowners feel. A recent Fortune-Researchscape International poll found nearly four in 10 prospective DIYers have delayed projects because of soaring costs.
That hasn’t stopped DIY activity entirely. In May, Ted Decker, president and CEO of The Home Depot, noted in an earnings call that DIY customers remained active: “The strong demand we saw in the back half of last year continued during the first quarter. From gardening to organization, new and returning customers are engaging with home improvement.”
When asked specifically about the lumber shortage during a Q&A, Decker remarked, “A sheet of OSB (oriented strand board) has quadrupled in price, and it’s risen even more since our fiscal quarter ended. Yet demand has stayed strong.”
For those considering new construction, Jepsen does not advise delaying: “We’ve seen a market shock with rapidly rising house prices, and they’re likely to keep increasing. Building a home remains an investment in an asset that should appreciate over time.”
Six Reasons to Hold Off on Renovating
Still unsure whether to renovate now or wait? Here are six reasons to hit pause on home renovations based on expert input:
1. Prices Will Likely Drop
While the timing is uncertain, lumber and appliance costs are expected to decline. They probably won’t revert to pre-pandemic levels, but they should fall to something more affordable than current peaks.
2. You’ll Have Time to Save
Waiting a year gives you an opportunity to grow your savings. Park the money in a high-yield savings account to earn interest, or if you can wait longer, consider bonds. If you tolerate risk, you could invest in stocks, which historically have averaged about a 10% annual return. Doing so could reduce how much you need to borrow when you eventually renovate.
3. Contractors Are Booked Months Out
We’re having storm windows installed over historic wood windows for better insulation and easier screens. We paid a deposit in early May and work is scheduled to begin by mid-August.
That’s not unusual. High demand means contractors are scheduling months ahead. If your project requires multiple trades (masons, plumbers, electricians, carpenters), coordinating schedules may be difficult and could leave your home a prolonged construction zone.
4. COVID-19 Risks Should Decline
As more Americans get vaccinated, it makes sense to delay renovations. By next year, assuming progress continues, we may reach herd immunity levels and feel more comfortable having contractors work in our homes without masks.
5. Consider Workmanship Quality
Newly built homes can appear impressive at first, but developers sometimes use cheaper materials and crews may rush to meet tight schedules, leading to issues down the line.
This was evident after the housing boom in the early 2000s when, years later, remodelers reported an uptick in defects in homes constructed quickly during that period (see report).
While many contractors aim to use quality materials and do thorough work, during shortages and high demand there’s a risk crews might take shortcuts that compromise results.
6. You Might Avoid an Impulse Project
Renovations are trendy right now. Watching Instagram after Instagram of new kitchens and bathrooms can spark a desire to renovate. By giving yourself a year to think it over, you can determine whether the project is truly worth your money.
If, after 12 months, you’re still ready to spend $20,000 on a new kitchen, you can feel more confident that it’s the right decision.
