Higher costs pinch home buyers
(CNN) - As home and rent prices soar, Americans are struggling to keep up with the cost of living.
Many are resorting to taking places they can fix up themselves, only to find that option may be just as expensive.
“This was nothing as I expected purchasing my first home,” said Allison Braun, who bought her first home in February.
After losing bidding wars and paying $75,000 over budget, she settled on a fixer-upper, expecting to save some money.
“It was really surprising getting in here and fixing things up. Overwhelming is another way I’d explain it,” Braun said.
Rents are up a record 17% in the last year, with home prices up nearly 20%. So are construction costs.
Braun, who works for the real estate company Redfin, is redoing nearly every space in her home.
The kitchen needed new counters.
“We were really surprised by the cost, especially the labor, to put them in,” Braun said. “We wanted to figure out a way of how we can do our countertops on our own. So the concrete countertops were born.”
She saved $3,300 by doing them with her partner.
She tried the same with her floors but underestimated how much she would need and the rapidly rising cost of lumber.
“We didn’t estimate enough wood for the first floor, and we went back to buy more wood for the flooring. And it ended up that after a month’s time the flooring went up about 25 cents per square foot,” she said.
But it’s not just homeowners getting stuck with higher costs. Construction materials are up 24% in the last year.
Bill McGrath’s company is installing elevators in a residential housing complex in New Jersey. So far, they have two in.
“Well, right here you have the electronics, which this is a stainless steel. The plastics, electronic boards behind it as cost and more. The ceilings, wood, you’re standing on lumber. There’s steel underneath,” he said.
And all of it is going up.
Supply chain slowdowns and demand have pushed construction costs up – forcing projects to come in over budget and over deadline.
A third elevator “is going to cost 17% more in material cost than the other two that we completed.” McGrath said.
And he said his 18-person company is spending more on gas to bring materials in, 24% in the last month.
All these rising costs have to get passed down in some way. “I guess (to) the people that will be living here,” McGrath said.
For Braun, the higher costs mean accepting some things, like painting the outside of house, get put on hold.
“We’d love to get hire somebody to do that. That’s been put on the backburner now, and we’re just going to have to learn to love the green,” Braun said.
In other economic news, analysts said inflation in the U.S. has hit a 40-year peak, while consumer sentiment has fallen to a low not seen since august of 2011.
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