Renovation demand has been growing as homeowners tap their home equity to make updates and improvements. ldquo;This year, the National Association of Home Buildersrsquo; Remodeling Market Index RMI revealed that in the fourth quarter of 2017, the RMI reached 60 for the second time since 2001,rdquo; said HousingWire. ldquo;Although the demand for home renovation has continued to increase in 2018, recently imposed tariffs are expected to reduce affordability for homeowners seeking renovations.rdquo;
So, could the higher costs associated with renos be enough to slow their roll? To be clear, the first round of new Chinese tariffs took effect on September 24, hitting ldquo;about 10 billion worth of Chinese products exclusive to homebuilding and remodeling, according to the National Association of Home Builders,rdquo; said CNBC. The tariff is expected to rise ldquo;to 25 percent by the end of the year. That would be equivalent to a 2.5 billion tax increase on the industry.rdquo;
Thatrsquo;s putting pressure on an industry that has been thriving even under a labor shortage, and that could bend to uncomfortable levels under higher materials costs. In addition, "Clients and contractors are having to set contracts with escalation clauses for projects that are being scheduled for six months from now, largely because were not sure how far prices are going to go north," Washington, D.C.-based contractor Justin Sullivan told CNBC.
So, if you were getting ready to add a bathroom, redo your kitchen, or create a killer outdoor area, should you proceed? That all depends.
ldquo;Trumprsquo;s trade tariffs will drive up the cost of some home renovations, so you might need to speed up your plans to finish a remodel before the supply chain impact hits you directly,rdquo; said GOBankingRates. ldquo;On the other hand, some costs are already up, so it might be worth postponing your renovation until prices stabilize.rdquo;
Specifically, they recommend moving forward with new kitchens and bathrooms. ldquo;If yoursquo;ve got a new kitchen or bathroom in mind, donrsquo;t wait. The new tariffs aimed at Chinese imports will raise the prices for tile used in bathrooms and kitchen backsplashes, cabinets, wallboards and floorboards, light fixtures, and heating and cooling equipment.rdquo;
Popular countertop materials like quartz are especially tenuous, facing a ldquo;double whammy,rdquo; with the U.S. ldquo;imposing import duties on quartz, which an investigation found was being illegally lsquo;dumpedrsquo; into the U.S. by Chinese exporters, capitalizing on subsidies from the Chinese government. Quartz prices are already rising and will likely continue to do so,rdquo; they said.
Nonetheless, updated kitchens and bathrooms are among the most-wanted features in a new home, so if yoursquo;re renovating to sell now or even a few years into the future, by all means, donrsquo;t change those plans. GOBankingRates also recommends moving quickly if you want to ldquo;convert a basement or mudroom into a laundry room.rdquo;
As for what projects to skip until costs head back down? Adding a room or garage can wait. ldquo;Some of the first tariffs President Trump imposed were on Canadian lumber, charging that Canadian companies were being unfairly subsidized by their government,rdquo; they said. ldquo;Canadian lumber prices have also risen in response to a supply decline due to tree disease and slower transportation. Wait for lumber prices to stabilize before you build a new home, add a room, add a garage, convert a basement into an in-law unit.rdquo;
