Building a new custom home is an adventure, much like a cross country road trip to a beautiful destination. You may envision sunny skies, a clear road, and sailing forward at 70mph – but reality says otherwise. You may encounter toll booths, road construction, detours, traffic jams, inclement weather, more bathroom breaks than you thought humanly possible… and the kids asking, then whining, then crying, “Are we there yet?!” (In this case, you may be the kid!).  

The secret to a smoother journey is fully understanding what to expect, planning for contingencies, and using a trusted guide to ensure you actually enjoy the journey – almost as much as you do the destination. 

Not-so-Unexpected Costs to Consider 

Let’s start by defining “unexpected.” 

When you purchase and remodel an existing home, there is no end to the costs you may encounter. A “simple” (famous last words) kitchen renovation, for example, can turn into an extensive – and expensive – project when you notice a leak and have to replace the plumbing and ceiling. And when the floor looks fine but the foundation at the addition wasn’t poured correctly. And… It can go on and on.  

One of the most significant benefits of building is that you eliminate these hidden surprises. That said, there are costs that you may not have accounted for, and these can catch homeowners unawares. These can include material and supply upgrades, land preparation and utility hookups (if applicable), trash removal, site cleanup, sanitation, and other aspects of a residential building project.  

The reality is, though, that none of these should be unexpected by the point you engage with your builder. They should work with you on a one-on-one basis to explain not only their process but also costs and payment schedules. So, even if you didn’t realize you’d have to factor in the cost of, say, renting a portajohn or of having the water connected to a town/city source, you will be made aware of this at the outset of your project so you can plan accordingly.  

But as they say, “The best laid plans….” What do you do when you run into truly unexpected costs? 

Download G&G’s Built for Living Guide for more information on our process, helpful tips, and behind-the-scenes on recent projects. 

Unexpected Costs When Building a Home 

We need to bring up the elephant in the room: COVID. The pandemic created even more chaos on an already stressed supply chain – and bad luck certainly lent a hand. When the 220,000-ton Ever Given was stuck sideways in the Suez Canal, for example, it blocked cargo traffic for six days. Not only was the massive ship carrying $1 billion in cargo itself, it kept $9 billion worth of goods (everything from furniture to wood to steel) from passing. This created ripple effects that are still being felt, hence Ever Given’s status as “The Ship That Broke Global Trade.” 

Even when cargo is on the move, surges in demand and in prices combined to create even more pressing conditions. Demand for lumber, for example, increased dramatically at the tail end of 2020 and well into 2021 as people, sent home from work and school, sought to make their spaces more comfortable with additions and upgrades – and in many cases, new builds.  

At the same time, supply issues grew more prevalent; factors from labor shortages at mills to warmer than usual temperatures and pine beetles in Canada (a major supplier of lumber to the US) created a “perfect storm” that drove prices skyward from under $400 per thousand board feet to over $1500 virtually overnight. Building the same house in late 2020/2021 cost an average of $19,000 more due than in early 2020 to lumber increases alone.  

According to National Association of Home Builders (NAHB) data: 

  • More than 90% of builders reported shortages of framing lumber, OSB, and appliances 
  • 90% reported a shortage of plywood 
  • 87% reported shortages of windows and doors  

The NAHB says, “The shortages are not extremely widespread, but extremely broad-based.” That is, of the 24 items listed on the association’s survey, half were reported in short supply by at least 70% of builders and 16 were reported as in short supply by more than 60%. Each item on the list was checked as in short supply by at least 43% of builders.  

To get some context, in mid-2020, fewer than 40% of builders reported that they experienced a shortage of any of the listed products/materials. We’ve also seen a 14.1% increase year-over-year in construction costs, including materials and labor.  

The good news: While there will always be an element of volatility in the market, prices are stabilizing and we are seeing signs of normality to ring in the New Year. 

The better news: These are no longer emergent conditions. The pandemic caught the world off-guard to some extent, and contributing factors (e.g., supply chain issues, labor shortages, inflation, etc.) piled onto the frenetic atmosphere. The construction and design industry had to anticipate rapidly changing conditions and put Plan B, C, and sometimes D into effect to keep projects moving forward. Clients, too, became adept at adapting. There was a steep learning curve, but we have come through – and taken invaluable lessons with us. 

Advice for Homeowners 

As you are building a home in this climate, remember: 

  • Communication Is Key. Unexpected costs do arise, as we’ve discussed – but the construction and design industry has adapted and become even more agile in the face of challenges. Your builder should communicate with you concerning anticipated pricing and timelines throughout your project.  
  • Open to Plan B – or Stick with Plan A? When it comes to design and material selections, determine where and when you are open to suggestions and alternatives. For example, if the sofa or appliance you love comes with a lead time of four months, are you willing to choose another that can be in place earlier? And if you’re not… Great. You know what you want. Again, your builder will communicate with you openly and transparently around product procurement and potential delays.  
  • Over Prepare. Be generous with your anticipated budget. It is essential that you do not feel you are stretched too thin; always leave yourself a comfortable cushion, as it were, to ensure that contingencies (e.g., supply price increases) are covered.  

Anticipating the Unexpected 

“Surprise!” is a welcome exclamation when it comes on a birthday or holiday. Not when it comes during your new home build. While the world offers no guarantees, your builder should. They should clearly articulate any issues with supply/material shortages, project delays, and anticipated cost increases. And they should mitigate as many of these issues as possible, whether by ordering early and storing materials safely, securing other avenues for procurement, and/or having suitable (or even preferable) alternatives to offer.  

There is no crystal ball; even the most experienced professional can’t predict the next perfect storm. But the best learn from the (recent) past and anticipate how events will play out for their clients. 

G&G Custom Homes believes that building a home does not have to be stressful. With the right team standing beside you, it is a journey you will savor. Almost as much as you do the destination. 

Connect with G&G to learn more about our unique process and how we can deliver an experience that is memorable – for all the right reasons