“Want to hear inflation laugh? Tell it your home improvement plans” goes one of the oldest jokes in recession climate instruction.
And Inflation will be an ornery grizzly bear for homeowners in renovation and repair mode in 2023.
Nothing dashes the best laid home improvement plans like a slumping economy mired with climbing interest rates.
“The level of annual expenditures for home improvements and repairs is set to expand to nearly $450 billion by the first quarter of 2023,” Abbe Will, Associate Project Director of the Remodeling Futures Program, told The M Report. “Yet, the rising costs of project financing, construction materials, and labor, as well as growing concerns about a broader economic slowdown or recession further slow remodeling growth.”
Persistent Inflation
Finding the available funds for a renovation budget will be the biggest obstacle for many U.S. homeowners not named Elon Musk planning needed renovations and repairs this year. That will likely lead to fewer realized home improvement projects over the next 12 months.
“Persistent inflation continues to create financial challenges,” Schar Construction.com notes.
The Leading Indicator of Remodeling Activity (LRA) projects year-over-year growth in homeowner remodeling and repair spending to shrink from 16.1% in 2022 to 6.5% in 2023.
“Housing and remodeling markets are undoubtedly slowing from the exceptionally high and unsustainable growth rates that followed in the wake of the pandemic-induced recession,” Carlos Martin, project director of the Remodeling Futures Program at the Cambridge, MA-based Center, told Kith and Bath Design.com. “Spending for home improvement s will continue to face headwinds from declining home sales, rising interest rates, and the increasing costs of contractor labor and building materials.”
Rising inflation makes it tough for homeowners to peg their exact home renovation costs. How can homeowners estimate their home renovation costs against an unpredictable economy bound to sudden supply price spikes? Planning ahead, and factoring in emergency reserve funds if needed, can give you a sound game plan and available budget for your renovation, no matter which way supply costs go this year.
Factoring Renovation Costs by Room
Start your Home Renovation Estimate by factoring costs needed per room. Be sure to factor in:
- Room Size
- Complexity
- Materials Chosen
- Labor Costs
- Location
Remember, older homes will cost more to renovate than new houses due to issues often present in old homes like asbestos, lead pipes and old electrical wiring. For example, renovating an older bathroom that requires new flooring, updated plumbing systems, a new bathtub and toilet is going to have a higher price tag than a remodel of a 21st century home that already has an adequate plumbing system in place.
HomeGuide pegs the average cost of an old home remodel at:
- $15-60 feet per square foot
- $20,000-$75,000 for the entire home
- Up to $100,000 for a three-bedroom home
Average 2023 Home Improvement Costs by Room
Here are Decorrect.com’s average home renovation and repair costs for 2023 by room, location and upgrade level:
- Kitchen: $25,656 ($150 per square foot)
- Master Bedroom: $15,0000 ($110 per square foot)
- Master Bathroom or Guest Bathroom: $25,000 (major remodel), $3,000 (minor refresh)
- Living Room: $1,500-$3,000
- Basements: $34,000 (major remodel); Finishing ($25-50 per square foot)
- Additions: $67,0000 (10×10 room: $16,000-$40,000)
- Decks: $6,000 to build (14 x 20 feet), $11,300 (replacement)
- Roof Replacement: $5,600 (low end), $11,700 (high end)
- Gutters: $1,500 (low end), $3,500 (high end)
- Garage: $11,000 ($7,000-$15,000 range)
How to Minimize Inflation’s Impact on Your Home Improvement Plans
Inflation threatens to throw a wrench or maybe even a cease and desist order for many planned home renovation costs this year. Here’s how you can minimize inflation’s impact on your family’s 2023 Home Improvement Plans:
- Stick to Your Budget: Easier said than done in this economy, but you need to know exactly what you can afford.
- Get Multiple Estimates: Don’t settle for one contractor’s ballpark figure, you could be overpaying.
- Get Your DIY On: As Decorrect.com notes, doing some of the work yourself with a YouTube remodel guide makes it quick and easy to “maximize your renovation while reducing costs.”
- Reuse: Nothing caps supply costs by recycling reusable materials or product you already have in house.
- Balance: Stay steady and even on materials if you are on a tight budget.
- Downsize If Needed: Focus on practical needs rather than lavish wants.
Know How to Beat Home Renovation Inflation
Yes, inflation is a great killer of home improvement dreams. The question every budget-conscious homeowner with 2023 renovation plans is asking themselves is universal.
“Is spending money on home improvements a wise move right now, especially with rising costs due to inflation and a still-burdened supply chain?” US News & World Reports’ Barbara Bellesi Zito writes.
But by getting ahead of it, and knowing what you can and should spend on your home improvement project this year can prevent this wild economy from wrecking your best laid home improvement plans.
“Before embarking on a renovation, consider your budget and your family’s lifestyle and unique needs,” Forbes’ Anna Durrani writes.
