How much does it cost? monitors data on the completely overpriced housing market in California.
Over the last five years, California’s home-repair inflation rate has more than doubled.
The California portion of the Verisk Remodel Index was examined by my reliable spreadsheet. These consultants for the insurance sector keep tabs on the expenses of 31 distinct home repair categories, encompassing more than 10,000 line items, from windows to appliances.
The pinch
According to Verisk, the average cost of repairs in California has increased by 40% over the last five years, while the prior five years saw a 16% increase.
By the way, it’s not a Golden State oddity. The cost of repairs has climbed by 40% nationwide since 2019 and by 15% over the preceding five years.
Painful points
Start by looking at total construction wages as measured by a single government index. According to Verisk, they currently account for 62% of repair expenses in California.
Over the five years ending in June, the average weekly wage for construction workers in California increased by 21%. This is in contrast to a 17% increase over the preceding five years.
The rising costs of materials used in building have been a major problem for repairs. Price increases were caused by everything from shortages brought on by the epidemic to the building boom of that era, including new units and remodels.
Over the five years ending in September, one federal index of wholesale prices for all building products increased by 38%. Compared to the 9% gains during the preceding five years, that represents a drastic change.
One slice
Another expense that hits the budget due to living expenses is home repair.
Consider the Consumer Price Index’s assessment of overall US inflation throughout this period: Compared to merely 8% in 2014–19, it increased by 23% over the course of five years.
Should I remind everyone about the housing values in California? According to one federal price index, they are up 47% in five years as opposed to a 33% growth in 2014–19.
Additionally, if you think someone would insure your house, repair expenditures can contribute to the explanation of growing home insurance premiums!
The Little Hoover Commission found that in the five years ending in 2021, average California premiums increased by 40%. Over the preceding five years, rates increased by barely 3%.
Bottom line
For those who are prepared to hire a contractor, the worst might be over. Consider the repair inflation of the previous year.
According to the Verisk analysis, California’s repair costs increased by just 3% over the previous 12 months. It’s a 4% rise nationwide.
Indeed, it is still rising, albeit more slowly.
According to the US wholesale price index, supply costs have decreased by 3% over the last 12 months, which accounts for the majority of the construction price alleviation.
Workers are still expensive, though. According to California’s wage index, labor costs for construction increased by 4% over the previous 12 months.
The Southern California News Group’s business columnist is Jonathan Lansner. His email address is [email protected].
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