Home Remodelers in for a Rude Awakening

For Renovators, a Rude Awakening

THE hurricanes that battered the Gulf Coast and Florida this year devastated communities and left tens of thousands of people homeless. Now consumers everywhere are likely to feel the impact of the storms in the form of rising prices for construction and building materials.

Many of those materials were already going up in price, but within six months things may be much worse.

Tack $7,000 onto the cost of building a typical house in 2006, according to Michael Carliner, an economist at the National Association of Home Builders. Because materials account for about a third of the cost of a new home, the increase "will have to be absorbed somewhere, most likely by consumers," he said.

And count on spending more to renovate.

"Prices are creeping up on all fronts," said Paul Winans, president of Winans Construction, a contractor in Oakland, Calif., which has added 15 percent to its bids over the last year to reflect a sharp increase in wholesale prices for materials.

Kitchen cabinets have risen 10 percent, he said; insulation is up 14 percent; finished lumber, 10 percent; windows and skylights, 8 percent; plaster and drywall, 15 to 20 percent. Materials for electrical work are up 15 to 20 percent, Mr. Winans said, partly because of factory closings after Hurricane Katrina.

Along with knocking out oil and gas platforms that supply plastics factories, Katrina shut down two big gypsum wallboard factories.

Although many oil production facilities are back in operation, the factories that depend on petroleum products are still facing shortfalls.

Ken Simonson, the chief economist at Associated General Contractors of America, a trade organization in Arlington, Va., says this uncertainty makes it likely that prices for some P.V.C. products used in home building, like insulation and roofing materials, "will remain 20 percent to 50 percent more expensive than in 2005."

Because of continuing production and delivery difficulties, cement and concrete prices are likely to surge 10 percent to 15 percent in 2006, on top of a 10 to 13 percent increase from October 2004 to October 2005, according to Mr. Simonson. And all this is before rebuilding in the gulf region gets under way. When that happens, says Mr. Winans, who is also president of the National Association of the Remodeling Industry, "it will be like a vacuum sucking up things like drywall, plywood, insulation and roofing."

--More on Home Remodeling Costs--

Posted on December 23, 2005 03:12 | Remodeling
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