We see it, we hear about it, and we feel it in our pocketbooks. Supply chain backups due to workforce shortage and overwhelmed demand, material costs skyrocketing from insufficient raw materials, and economic inflation all point to home improvement costs continuing to rise into 2022.
Hopefully, anyone needing home improvement in this last year has finished or at least started their project.
If you DID finish, then you can attest to our previous blog and thousands of others like it telling you to pull the trigger sooner rather than later because prices are about to skyrocket.
You're probably smiling at yourself, knowing you just dodged the inflated price bullet. The days of waiting for prices to go down are now officially dead for the foreseen future.
So what's causing the continual rise in home projects? If you keep up with world news, then you may know, but let's dive into what is behind these outrageous, ever-growing costs.
It starts at the very beginning. Many people think items like smartphones need to be assembled, packaged, and shipped.
But what makes the pieces needing assembly? What about the aluminum chassis, the PCB boards, the materials for the cardboard boxes to ship them in? How about the metal that needs to go on your roof, or the aluminum for your gutters, and even the minerals and stone for the granules that make up your shingles?
We have received numerous emails from major suppliers telling the same story,
"we have continued to experience ongoing supply chain constraints including significantly reduced raw material availability across nearly all major product categories. In addition, we have been and continue to receive significant raw material and transportation cost increases from our suppliers. Unfortunately, these conditions are expected to remain a challenge throughout 2021 and into 2022."
The price of metals and minerals has blown up since the beginning of 2020 and has only recently seen a slight dip due to the end of the busy summer season.
Market Insider reports lumber has seen a tremendous drop in the market price, dropping from its record high of $1686 per thousand board feet in May to $658.
But don't expect to see that reflected in your local stores anytime soon. Why though? Well, inflated market price aside, there are still significant factors contributing to higher prices.
The world is getting smaller every day. We outsource raw materials from across the globe, which is still recovering from some very debated lockdowns.
So when you have neighbors like Canada with stricter lockdown policies and more liberal payouts for unemployment, it incentivizes workers like loggers and miners to stay home instead of working.
After all, why would you put your life at risk felling trees or blasting quarries when the government is paying you more to stay home?
And this isn't pointing the finger at Canada. Most countries, including the US, have arguably overreached on the lockdown front leading to some serious economic damages.
Well, these have consequences.
No workers → no materials → diminishing supply → demand increase → (finally) price increases because a once common item is now a rarity.
There ya go! I summed it up in one little graphic.
And that's just the material pipeline. We never even got into the nitty-gritty of shipping, repairs, marketing, intermediate partners, and hundreds of other things.
But don't take my word for it. Our suppliers send us more emails like these than we care to get. It's like granny doesn't write us anymore. We just get bills in the mail.
"On June 17, we announced several price increases in a variety of categories, including a notice that our fuel and freight surcharge would increase by $75 to $425 per truckload."
If you are the unfortunate ones that NEED a project completed (like those affected by recent storms in the south), then your best bet is to pull the trigger as soon as possible before the prices continue to rise. Just rip that bandaid off fast. Every week you wait is a price hike.
If your home improvement project is not a necessity, then you could probably wait it out. But it's going to be a long wait.
Economies have ebbs and flow throughout history. Look at the late 1960s leading into the 1970s when the market went to crap. I'm sure everyone thought it was the end of days.
Just give it some time, some good leadership correction, and it will eventually level itself out.
But until that day comes, I encourage people to be smart with their finances, help those in need if you are blessed enough to do so, be an encourager,