Inflation is raising costs for everything from groceries to property maintenance, but it may be hitting home repair expenses hardest. According to a new report from Thumbtack, annual maintenance costs are at an all-time high.
While a slim majority of homeowners say they try to proactively stay on top of repairs, external pressures like inflation and supply chain issues can make it difficult to manage repairs.
Materials
Justin begins this Poplar Propcast episode by addressing the proverbial elephant in the room: the relentless surge of inflation. Historically, housing maintenance costs have been stable, but the COVID-19 pandemic caused major disruptions to supply chains and labor shortages that ultimately drove prices skyrocketing.
Inflation has left no corner of the economy untouched, and property managers must prepare accordingly. This includes investing in higher-quality materials with long lifespans that can offset future price hikes. For example, a repainting project that calls for high-quality paint with a lifespan of 7 to 10 years might cost more upfront but will save money in the long run by avoiding costly repairs.
Justin dives into the specifics of home maintenance materials, highlighting that although prices have dipped in some categories (such as asphalt), overall they are expected to remain elevated. He also warns that delaying critical maintenance items will only result in more expensive repair bills later on. Instead, property owners should be proactive in self-diagnosing and correcting issues as they arise.
Labor
While lifestyle inflation is common amongst Americans, it can have a severe impact on long term financial goals. Indulging in small luxuries may seem harmless, but it can jeopardize your ability to pay down debt, save for retirement, or buy a home. Fortunately, there are ways to curb lifestyle inflation. The best way to do this is by setting spending limits, prioritizing larger financial goals, and doing your own work whenever possible.
According to a recent survey by Thumbtack, the average annual maintenance cost for single-family homes rose by nine percent year over year. Many of these costs are driven by the increase in materials prices. For example, high-quality paint with a lifespan of 7 to 10 years costs more than the standard paint that lasts five to seven.
Property managers must prepare for rising materials prices and prioritize structural maintenance over cosmetic projects. Delaying repairs can result in damage that requires expensive repair bills later on.
Regulations
Inflation is caused by rising prices for a basket of goods and services consumed by consumers. The basket includes housing costs, which make up a third of the overall Consumer Price Index (CPI). A recent survey by Hippo Insurance found that two in five homeowners say they feel less comfortable making big home improvement and maintenance purchases because of inflation.
As a result, many are delaying critical work that can lead to even more expensive repairs in the future. Property managers need to prepare for high inflation by renegotiating insurance coverage and prioritizing structural maintenance over cosmetic work. They also need to ensure they have sufficient savings for unexpected costs. Purchasing higher-quality materials is another way to combat surging prices. For example, if the budget for repainting only calls for low-quality paint, it might be worth the extra cost to buy one that will last longer. This will minimize future maintenance costs.
Insurance
Aside from the direct impact on homeowners, inflation also drives up insurance rates. Typically, a homeowner’s policy is based on the cost to rebuild the home in case of a total loss. Since the start of the pandemic, construction materials and labor costs have risen significantly. Price increases for softwood lumber, steel, ready-mix concrete and gypsum products have all climbed higher than normal.
Those cost hikes get passed down to consumers, and they can quickly add up. In fact, according to a 2022 study, the average homeowners insurance premium rose faster than inflation in all but one state – and 13 states saw premiums rise more than 50% above current inflation rates.
While most homeowners proactively seek out ways to avoid home repair issues, three in five say they’ve had to pay for an unexpected maintenance project in the past year. And two in five say inflation and price increases have kept them from doing planned maintenance. Delaying important work can lead to more damage, and may even make a homeowner’s insurance claim less likely to be paid. Luckily for those who have a home appliance protection plan, they are able to get repairs and replacements without the stress of inflation.
