A painting contractor by trade, Don Dellino knows a lot more about residential remodeling than your average homeowner. But even he was startled by the recent run-up in construction costs due in large part to soaring prices of building materials. Dellino and his wife are expanding their two-bedroom Manhattan Beach home into a 3,900-square-foot Italian-style villa.
"One bid for the roof was $14,000 higher if I decided to use copper flashing," said Dellino, who opted for the less expensive -- if less attractive -- galvanized metal. Despite his cost-cutting, however, Dellino's home makeover will wind up costing about $450,000, significantly higher than his own original estimate of $300,000.
The sharply rising cost of materials is creating a financial headache for homeowners planning everything from simple maintenance projects to full-scale renovations. Remodelers such as Dellino are opting, in part, for cheaper materials to contain costs. But most are digging deeper into their pockets and paying more. Homeowners are finding that some contractors are shortening the expiration dates on their bids or adding contractual clauses to protect themselves from price hikes in materials.
Since the spring of 2003, skyrocketing prices for construction supplies -- including cement, drywall, lumber and nails -- have swelled the cost of building a new house by about $7,000, according to Michael Carliner, an economist with the National Assn. of Home Builders, an industry trade group in Washington, D.C.
"The biggest component of that has been the increase in wood products," Carliner said.
Of course, consumer prices in general increased last year. Food rose 2.7% and energy costs, including gasoline, escalated 17%, according to the Department of Labor's consumer price index.
But construction materials have climbed even more steeply, according to NAHB statistics. Nationwide, lumber prices jumped about 27% in 2004, said the NAHB, while scrap steel -- used in nails, wire mesh and other building materials -- rose 80% and cement, 6%. For consumers, that translates into higher prices for nails, drywall and boards at checkout stands and higher bids from contractors.
In Los Angeles County, the price of plywood jumped 47.5% last year. Steel studs (sometimes used in place of framing lumber) shot up 37%, and lumber climbed 21%, according to Marshall & Swift, a research firm that provides the insurance industry with building cost data. Orange, Riverside, San Bernardino and Ventura counties experienced similar increases.
