Home Renovations Were Always Tough. Now Many Are Giving Up Mid-Project.
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Home Renovations Were Always Tough. Now Many Are Giving Up Mid-Project.

Labour shortages and high demand have meant months-long slowdowns for people waiting to fix up their homes

By RACHEL WOLFE
Fri, Mar 24, 2023 9:04amGrey Clock 4 min

USA: A surge of home renovations in recent years combined with a shortage of contractors is turning more repairs and remodels into never-ending nightmares.

New homeowners and those renovating always expect projects to require more time and money than their contractor estimates. But for many, the costs have become so high and the waits so long that some are now abandoning projects midway, forcing them to live among half-finished renovations for months. Others are taking up the drywall themselves.

A renovation now takes 79 days on average, up 259% from 22 days in 2019, according to Jobber, an operations-management company whose software is used by home-service professionals. Remodelling is more expensive: Hourly wages for general construction workers are up 42% over the same period, from $35 to $49, according to insurance analytics firm Verisk. Material costs have climbed, too.

The Federal Reserve raised short-term interest rates by another quarter percentage point on Wednesday, a decision that will likely continue to suppress purchases of new homes. More people who had planned to move may now stay put and renovate their existing property, says Abbe Will, a researcher at Harvard’s Joint Center for Housing Studies.

Spending on home-improvement and repair projects in the U.S. increased by an estimated 15% in 2022 to a record $567 billion, following an 11% increase in 2021, according to a report issued Thursday by Harvard’s housing studies centre. Historical growth has averaged around 5%, says Ms. Will, the lead author.

Baxter Townsend and David Zlotnick thought buying an outdated Manhattan apartment and renovating it would be more affordable than new construction. Over a year and $250,000 into a remodel quoted to take a maximum of 15 weeks and around $100,000, they say they regret their decision.

The couple had to pay to completely redo the electrical work after Mr. Zlotnick tripped a circuit and sent sparks flying by plugging in a vacuum. The tiles in the primary bathroom are crooked and the sinks askew. Still, they dismissed the design firm they had been working with this month so they could finally move back home.

“We’re like, ‘Pack up and get out. It’s been a year. Please leave,’ ” says Mr. Zlotnick, who works in international shipping logistics. They plan to hire a different firm to finish the project, if they can find one.

New recruits needed

Those renovations and repairs can’t happen quickly without an influx of qualified workers. The construction industry will need to attract more than a half-million additional workers on top of the normal pace of hiring in 2023 to meet the demand for labor, according to Associated Builders and Contractors, a trade organisation.

General contractor Miguel Villamil employs four people in Indianapolis, and says he has struggled to find more workers. His lead time for projects has stretched up to seven months, and he has raised prices for his services considerably to stay staffed. He pays his workers a starting salary of $20 to $25 an hour, up from $12 to $15 in 2020.

He says he is frustrated with contractors who deliver rushed and shoddy work—hurting the industry’s reputation—and with homeowners who don’t always recognise the realities of the marketplace.

“It’s a big, big, big problem,” Mr. Villamil says. “People without experience starting their own businesses, but also big companies who end up hiring subcontractors who have no experience because they have no choice.”

Facing long waits and high prices, some impatient homeowners are taking matters into their own hands—with varying results.

Total homeowner spending on do-it-yourself improvement projects grew 44% between 2019 and 2021, to a record of $66 billion, according to the Harvard report.

Mr. Villamil has picked up jobs from homeowners who tried, and failed, to do it themselves.

“Some of them do a halfway-decent job,” he says. “Some of them don’t.” He adds that one client inadvertently wired the TV to click on every time he flipped the light switch. “They try their best,” he said.

DIY by necessity

Laura Hrusovsky wasn’t trying to save time or money when she became the general contractor on a massive home-repair project. She just didn’t feel like she had a choice.

About a year ago, Ms. Hrusovsky came home from a day out with friends to a sopping entryway carpet and water cascading out of the light fixtures. An upstairs toilet had sprung a leak from the water line, spewing hundreds of gallons of water through her 3,800-square-foot home in Valparaiso, Ind.

When their preferred general contractor said he couldn’t start for another six months, her husband, Jim Hrusovsky, had an idea. “I said to Laura, who is very well organised: ‘Are you willing to try it?’ ”

She took on the 40-hour-a-week project, but isn’t happy she had to. “I just lost a year of my life,” she says. She says she has a newfound appreciation for construction work.

Evan Moody and Autumn Furr bought a second home in New York’s Catskill Mountains in summer 2021. The couple expected the few cosmetic upgrades and repairs on their list would take a couple of months. Almost two years later, the house still isn’t finished.

After getting turned down by every electrician in the area, Mr. Moody ended up pleading with one who was two counties over. On top of a $100 surcharge for travel, he said he could only come on a rainy day when he couldn’t do the outdoor work that made up most of his income. A storm didn’t occur for weeks.

Tired of waiting, Mr. Moody recently took a week-and-a-half away from his job in advertising to build a back deck himself. He knew he was in trouble and needed a professional to finish the job when he had barely gotten the holes for the posts dug by the end of day two.

“I think that going into this, we had the perception that we were very good DIYers,” Mr. Moody says. “I learned that, in fact, I wasn’t.”



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The best suburbs for investment opportunities in Australia in 2024

There’s money to be made in the property market — if you know where to look.

By Josh Bozin
Tue, Mar 19, 2024 2 min

If you’re a first homebuyer, owner/occupier or investor, you might feel that the property market is slim pickings in some of your favourite city suburbs. Either there’s no supply or the reserve is well above your budget threshold. However, for those property-savvy individuals prepared to look harder, there’s a growing number of suburbs in Australia’s major cities that are proving to be great investment opportunities…

—…you just need to know where to find them.

Independently-owned real estate agency, Little Real Estate, has released its annual report for the best Australian suburbs for investing. Investors searching for affordability, cash flow, and capital growth potential are being encouraged to consider regional locations, including four in Queensland.

“In 2024, we anticipate a surge in property prices fuelled by the relentless demand for housing outpacing the available supply,” says Little Real Estate executive general manager of sales, James Kirkland. “An exceptionally strong rental market, coupled with a shortage of housing, continues to exert upward pressure on house prices nationwide.”

Real estate analyst Hotspotting’s National Top 10 Positive Cashflow Hotspots echoes the findings of Little Real Estate’s annual report. Its analysis found that Queensland locations showed exponential capital growth, with the Sunshine State securing half of the top 10 locations.

“Cash flow has become increasingly important over the past two years, given the much higher mortgage repayments in play,” says Hotspotting director, Terry Ryder. “It is imperative that investors seek out areas that also offer capital growth prospects, often due to their booming local economies across a diverse range of industries.”

Which location is best for a property investment?

It depends! According to Little Real Estate, in 2024, the Sydney suburbs of Wiley Park and Kensington come out on top, along with Caloundra West and Southport in South East Queensland, and Carlton and Moonee Ponds in Melbourne.

What is the most in-demand suburb in Sydney?

The property market is certainly inflated in Sydney in comparison to other states but investors can still find some gems in certain pockets of the city. Take Penrith, for example. According to REA data, the average cost of a unit in Penrith costs $540,000, with a rental yield of 4.3%.

Which state is best for investment property in Australia?

It’s hard to go past Queensland as one of Australia’s best states for investment properties. With four out of ten suburbs in Queensland appearing in Little Real Estate’s annual report—including Southport, Caloundra West, Coomera and Bulimba—Queensland and its surrounding suburbs, typically regional, are presenting as great investment opportunities.

“Whether you’re an investor, a family looking for a new home, or a professional seeking the ideal work-life balance, these suburbs are the ones to watch for growth and potential in the upcoming year,” says Kirkland.

What is the fastest growing suburb in Australia?

According to Smart Property Investment, the fastest growing suburb in Australia is Chelmer, Queensland – a south-western suburb in the city of Brisbane, with a quarterly price growth of 29.33 per ent. This is followed closely by Frenchs Forrest in NSW, and Greenmount in Queensland.

 

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