You’ve heard the old adage, “buy low, sell high.” And you can probably think back to golden opportunities that were missed like getting into that certain stock when it was low. Well, now may be the time to apply that fundamental. Invest in your house. No, I don’t mean put your money in your mattress or between the floorboards. I mean, invest in walls, floors, fixtures, roof, kitchens, baths, etc.
Over the last five years, we would receive notifications on a monthly basis from our suppliers about price increases for most of the materials that we use. Materials prices were out of control. After the commodities bubble burst, and petroleum prices plunged, material prices have stopped increasing so dramatically. There were other factors that affected specific materials like plywood. Supply not keeping up with demand, and The Department of Defense purchasing large quantities of plywood for Iraq and the Middle East, drove plywood prices higher. But with less demand and the anticipated draw down of troops in the Middle East, these prices will ease back. Prices almost never return to what they were prior to the event that caused them to increase in the first place, once the event or crisis is over. Copper prices had skyrocketed, but they’ve returned almost to what they were before the run up. Close, but not quite. But lower copper prices should result in lower subcontractor cost for copper piping for plumbers and copper wiring for electricians.
The other major cost element in any project is labor. When you hire a socially responsible contractor, you are most likely hiring a contractor that provides healthcare coverage to its employees. For instance, Thomson Remodeling Company, believes that offering health care coverage to its employees is a vital element in keeping good people. So, health care is one component of the labor figure. In a similar manner as the material increases, we would receive annual increases in health care coverage costs. Unfortunately, there is no end in site to the continued health care cost increases. Another significant (seriously major) component of labor is worker’s compensation premiums. Fortunately, for many contractors, these figures are probably lower than in previous years as work loads decrease. Work loads decrease and transportation costs decrease as well. Just as lower fuel costs help lower material costs, lower fuel costs also help lower the cost of getting our workers to and from job sites.
There is a perception out there that nobody’s lending money. But the truth is, people with good credit should be able to get low interest money.
All of these factors help drive down the cost of home improvements. Quite a few of our customers have recognized this and have not given into the “sky is falling” mentality that seems to be so prevalent. You may have been wondering, “is anyone else having work done?” The answer is yes! And since houses aren’t selling at the pace they were, I think people are more apt to stay in their existing home. To this end, people are performing several types of home improvements. There is the one camp of people who are fixing things that are broken or doing repairs that have been “neglected” such as roof repairs, siding repairs and porch restoration. And there is the other camp, who are making their homes more liveable and enjoyable with new kitchens, additions and bathrooms.
The return on your investment in your home is not measured just by an appraisal or bank statement. If you plan on staying in your home, as most of us are, the return on your investment in your home is your satisfaction and enjoyment of your new kitchen or bathroom. Are housing prices down? Yes. Is the value of your home ever going to reach zero? Unlikely. Can an investment in a stock, bank or 401K go to zero? Possibly. I’ve had a few stocks that might as well be zero. In fact, there are a few mutual funds that I’ve had where I’d be better off if had just put the money in a new kitchen. At least I could enjoy a new kitchen, aahhh granite and stainless. Yes, you could put your money in your mattress, but be careful. A friend of our family was given a couch by her dead brother’s wife. When she was moving the sofa into the room, she heard something thumping around inside the sofa. She reached in the sofa and pulled out $3,000 in cash. Her brother was socking his money away in the couch. She gave the money to her sister-in-law. But to think that sofa could easily have gone to the dump or Good will, and if he had put the money in the stock market, she’d have pulled out a ball of lint. Don’t sock your money away in your sofa. So, before the next great commodity and labor price run up, make an investment in your home that you and your family can enjoy. Buy low and some day, you will sell high.
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