Construction Costs Are On the Rise (Rapidly)
As many have noticed, in the last year, the cost of building materials has increased exponentially nationwide. Our brokerage has local examples of contractors we work with who are putting expiration dates on bids at this time because they can no longer guarantee what the material costs will be. We’ve spoken with a few of our insurance carriers and this trend has been confirmed with claims data.
To put this all into perspective, the average price for eastern spruce-pine-fir — one of the most common building materials used to frame a house — is roughly $1,000 per 1,000 board feet in 2021. Last year, the same building material cost contractors about $420 per 1,000 board feet, according to David Logan, the director of tax and trade policy analysis for the National Association of Home Builders.
…but what does it mean for homeowners?
Homeowners insurance policies without a significant extended dwelling coverage may now be underinsured. Even 150% extended dwelling coverage can’t compete with 2-3x building material costs.
Our advice? Check with your insurance carrier to see what you need to do to make sure you and your home are properly covered during this uncertain time.
Written By: Joshua Downey