Factors Driving Construction Cost
If you’ve been reading the papers, you’ve probably seen a headline claiming that housing in SoCal touts “most expensive average home price in America,” or something of the like. On the macroeconomic level, a combination of factors are hitting the construction industry hard. On the local level, businesses are adjusting prices which ultimately hits your pocket. Before you plan for your next project, consider how these variables can accelerate or delay your end goals.
Imports from China. Without getting too political, approaching any home project means you gotta look at the big picture. If you’ve been watching the news lately you’ll have heard that there is friction and tariffs between the United States and China. What this means for anyone considering a renovation project is an increase in cost from sources that comes from China most notably steel. While you may not be planning construction of a new football stadium (Go Rams!) this does have the potential of impacting the cost of your project by increasing the cost of your finishes. In the short-term, it’s debatable how this will directly affect prices, and ultimately whether you want to hold out for that premium finish or the hardwood flooring you’ve always wanted. Call or email me if you have questions about the market prices.
Increasing Labor Rates. County of Los Angeles minimum wage is now $12 per hour (which is higher than the states minimum), which will eventually be $15 in a couple years. (See Reference) It’s affecting people from the unskilled construction worker to even the experienced project manager. Based on the Bureau of Labor Statistics, you might expect to pay more than that depending on the multiple skill sets you may need for your remodel.
In the county of Los Angeles itself we are experiencing a boom in home renovations keeping skilled labor employed and able to charge employers more per hour because of such demand. The cost for quality and skilled labor increases by month and that will inevitably impact a home renovation budget. You want to work with someone who knows what they are doing and the cost for that expectation has and will continue to increase. The minimum wage has made the days of “affordable labor” a thing of the past.
More Expensive Materials. We’ve also seen increasing costs of labor have also affected building and raw materials. When I first started this business, I was only paying over $2.50 for a 2”x4” from Home Depot – that price today has increased twofold. When you’re building a whole room, that slight increase can turns into hundreds more you hadn’t planned for.
- Plumbing, piping, drains
- Electronics, appliances, mounting equipment
- Lighting, switches,
- Carpentry, flooring, shelving, trim
- Finishing (Plan ahead for this often-overlooked expense, which can nearly double your budget when done at the wrong stage)
Permits, taxes and fees.
Construction costs can also be weighted by the codes or compliance rules governing your project. Whether you want a small upgrade for a patio or a complete overhaul like the Transitional Marina Del Rey Home we did, each homeowner is responsible for complying with local ordinances and city restrictions. Be sure you have an experienced builder who knows how to navigate the world of permits and government government constraints like we do.
Use these variables in construction cost to your advantage. With New Generation Improvements, let us help you assess your options before you make the leap towards home improvement.
Give us a call at 310-744-5933 or send us a message by clicking below.