How to Assess Renovation Issues in 2022 During the Pandemic
I recently had a couple of Calgary interior design clients who were about to embark on a $200k renovation of their home, comprising many rooms and changes at once. Some of this home’s renovations were cosmetic, and other parts of the project would involve significant physical changes. Additionally, there was a hefty amount of appliances, custom furniture and a few emotional ‘wish lists’ in the mix. It was a serious amount of work that was about to be embarked upon by the clients, who had a very clear idea of what they wanted.
Looking at the overall design for potential issues and timing
Having been hired to offer interior design advice ahead of the renos in multiple rooms, I too would have my work cut out in defining where to start, proceed, and tie it all together. The home was about to have some major ‘surgery’ done, and most of it was to happen at once. In addition to changing flooring, carpeting and paint, my clients had also hired a cabinetry company and had drawings for a new bar as well as cabinetry for the kitchen, dining room and other areas.
We spent several hours together, and for this particular interiors consultation, it quickly became apparent that timeline and expectation guidance was desperately needed, as well as advice on how the changes might impact the resale of the home in future. As a trained interior designer and home stager, I need to guide my clients on their design choices not just for the present but also provide guidance on how their design choices could affect the sale of their home in future.
In my mind, I had to triage this future project into sections, as the pandemic we are going through is creating problems with the interiors world, specifically supply chain, lumber prices, and, low and behold, the state of the economy. In the past, I had worked in the world’s largest investment bank, Citibank, in London, England, and I could see significant financial issues on the global economic stage that I wanted my clients to consider before spending heavily on their projects. As someone who invests, pays close attention to the economy and real estate market as well as design trends and issues, I proceeded to offer guidance on the four key items that needed special consideration ahead of beginning their renos:
1-Supply chain issues and appliance chip shortages:
I began by letting my clients know that the Covid-19 pandemic has drastically slowed down the supply of materials across the globe, delaying delivery times everywhere. I explained that factories are being affected by staff illness, have difficulties obtaining components, and sickness is impacting staff availability with shipping companies as well, all causing a knock-on effect for processing and delivery and times. Additionally, there is a global shortage of microcontroller chips, which are now a feature of many home appliances. (https://www.reuters.com/world/china/fridges-microwaves-fall-prey-global-chip-shortage-2021-03-29/).
For this scenario, I advised shopping close to home, buying floor models and supporting local as much as possible to save time and money on the project, which could also support Calgary businesses.
2-Lumber prices and tariffs on imported furniture
Next, my clients were keen to order a custom-built, very large u-shaped sectional so that they could entertain their extended family and friends, which would be a pricey endeavour under normal pre-pandemic circumstances. I explained that lumber prices were skyrocketing not only in Canada but in many other countries as well.
I also explained that there are currently high tariffs charged on furniture imported from the far east, therefore doubling or even tripling the costs of furnishings. Tariffs imposed by the Canadian Border Service range from ‘20.65 percent to 295.9 percent on some furniture being shipped from China, and between 17.44 percent and 101.5 percent on some imports from Vietnam’ (https://www.timescolonist.com/local-news/furniture-prices-expected-to-jump-as-tariff-of-up-to-2959-imposed-on-some-products-4689534). A sofa that once cost $1000.00 could now cost as much as $2500.00!
My advice in this case, was to focus on other parts of their renovation first, waiting until late fall 2022 to proceed with the bespoke sectional, and again to support local as much as possible when shopping for furniture. My thoughts were that by this time, with summer over, the pandemic might also have slightly settled down or normalized somewhat and hopefully bring down the cost of wood, potentially bringing down the cost of constructing such a large custom piece. The clients agreed this was a worthy consideration and decided they would re-evaluate creating this bespoke piece until a later date.
3-The current global financial market
At the time of writing this article, there is talk that the Bank of Canada has two impending interest rate hikes: (https://www.reuters.com/world/americas/bank-canada-hike-rates-by-50-basis-points-april-2022-04-06/) and that the current rate of inflation is now an eye-watering 6.7% (as of April 20, 2022: https://www.rateinflation.com/inflation-rate/canada-inflation-rate/).
Lastly, the prediction by economists is that Canada will go into a significant recession in the near future: (https://www.bnnbloomberg.ca/economics/video/canadian-recession-likely-more-severe-than-other-countries-macquarie-s-david-doyle~1959740). Since the clients shared that the combined project costs were an estimated $200,000.00, I urged them to alter their all-at-once renovation into smaller, prioritized projects. It is my belief that spreading out their renovation timeline could minimize any financial riskiness in the near future as the project gets underway and unfolds over the next several months.
4-Real Estate Resale:
One thing I always caution in terms of home renovations is to weigh the pros and cons of the home improvements in terms of reselling the home to a future buyer (benefits vs possible future home-buyer objections). Things to consider would include colour selections or the size of new additions to areas of their current home’s footprint. It is always a good idea to ask yourself if the cost of your renovations will bring about better future saleability, or will the high cost of renovations make the property the highest-priced home on the block when you list it for sale? My recommendation was for my clients to ask themselves ‘will these renovations age well for the time we anticipate living in the home, and, will these renovations price us out of the market in order to break even if we need to sell for whatever reason?’
Be observant of all factors in the interior design industry that could affect your renovations ahead of starting
These are uncertain times we are living in since the spring of 2020. With the current cost of living currently so high and supply chain issues of the world affecting our interiors projects so drastically, it is my opinion that it would be prudent to consider all of these factors ahead of proceeding with expensive renos. Look at all material costings, and shop local wherever possible. Evaluate the current economic state, as well as supply-chain constraints as we continue to navigate the pandemic.
Lastly, my advice is to triage your 2022 home renovations project in time and cost increments. Evaluate all home improvement expenditures and spread out the time and expense of your renovations to maximize savings on pieces experiencing price hikes or delivery issues due to the Covid-19 situation. Well-managed projects suffer fewer problems and deliver better final results, both for your wallet and peace of mind. Finally, remember to always work with a great interior designer for your home projects. We are here to look out for you.
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