It’s no secret that we’re living in a time of economic uncertainty and market fluctuations. Almost every industry in the world is being actively affected by these conditions, and the home-building industry is no different.
For those who want to invest in a new home build or are looking to undertake renovations or more ambitious extensions to their current home, this financial volatility is understandably a real point of concern. So, the question is, what can you do to navigate this financial uncertainty?
Without a doubt, the best approach is to seek out a homebuilder who offers robust fixed-price contracts for their services.
The Risk Costs That Come with Contracts Without Fixed Pricing
There are several financial risks that can come from engaging with home builders that don’t offer fixed-price contracts as part of their services. Let’s take a closer look at each of these below:
Fluctuating Material Costs
In general, you’ll find that the cost of materials necessary to building or extending a home tend to increase year-over-year. But in more recent years, a range of volatile factors have seen material costs increase significantly at different times. And while costs can fluctuate depending on market conditions, the majority of the time you’ll find most fluctuations lead to notable increases in cost rather than decreases.
It’s no secret that market conditions have been in a constant state of flux for the past year or two, particularly due to factors such as supply chain issues, regularly shifting tariffs, as well as the increased cost of fuel necessary to transport materials on a global, national, and local scale.
If you engage with builders who don’t offer clear fixed-price contracts, these ever-fluctuating prices can lead to sudden and unexpected price hikes that could leave you in a financially precarious position or needing to scale back the scope of your home-build work. Either way, you’re the one who pays in the end – be it through increased expenses or sacrifices to your vision.
Inflation and Interest Rates
Another two key factors are inflation and interest rates, which continue to fluctuate in kind with a variety of global market factors (such as those noted in the previous section). The long and short of inflation and growing interest rates is that they then increase the costs to builders. Material prices increase, and labourers will request increased wages, and a general level of budget uncertainty can make it hard for builders to provide clear-cut prices for clients.
Interest rates can increase borrowing expenses for construction companies and they often have to pass on the higher costs of their operating loans by increasing their own service pricing. Naturally, these factors make builds, renovations and extensions more costly to the client. But these costs can become even more volatile without fixed-price home build or fixed-price home extension offerings.
Labour Costs
As you’d expect, increased material costs, inflation, and growing interest rates almost always increase the cost of labour. This also results from workers needing pay bumps in order to handle their own cost-of-living needs. For home-build and construction companies, one of the quickest ways to offset increased overheads is to escalate labour costs.
But as is the case for many industries right now, these costs are impacted by a lot more uncertainty. While ideally you’d always want a steadily growing economy that can keep up with market demands and adapt with ease, the ability to do so is significantly undermined during times of global conflict and political uncertainty.
As a result, building companies that don’t offer a construction budget guarantee may add more and more expenses to the contract should more volatility drive a need to account for higher labour costs. While it can be an understandable decision for a home builder to make, it unfortunately means the client could experience a significant budgetary blow-out or need to pull back and abandon aspects of the vision tied to their build, renovation, or extension.
How Fixed Price Contracts Protect Your Investment and Offer Peace of Mind
With so much flux going on in the world and impacting almost every industry, finding ways to avoid cost uncertainty is more important than ever. In the space of home design and building, the best way of having this certainty is to engage with home-build professionals who offer fixed-price contracts.
Whether you’re in the market for building a brand new custom home or you want to undertake renovations or an extension to your current abode, fixed-price contracting helps you stay in control of your budget and offers something truly invaluable – peace of mind.
At Sherbrooke Design and Construction, we deliver fixed-price builds, renovations, and extensions. Not only that, but you’ll know the exact price range to expect early on. Every initial quote we offer for a build project is guaranteed to fall within 5% of the final fixed-price contract. So, from almost the very start, you’ll know how much money to have on hand for the project, and we guarantee there will be no nasty cost surprises down the line.
While costs are growing due to the state of the market, it’s knowing how much you’ll need to pay without ambiguity or uncertainty that makes all the difference.
If you’re ready for a new home build, renovation, or home extension, get in touch with the team at Sherbrooke for an initial consultation!
