MAX Insurance Agency
Lumber Prices and Replacement Cost on your Home
By Kim Bronder
Lumber prices are at an all-time high. As this Fortune.com article stated yesterday, “When the pandemic hit, sawmills cut production and unloaded inventory in fears of a looming housing crash but the exact opposite happened. People looking to renovate or take on DIY projects had increased demand for timber.”
During the pandemic, many homeowners took advantage of free time to start (or finish) those long awaited projects (finish the basement, flooring in the attic, a new deck in the backyard, etc.) and spent a lot of money at lumber stores!
Today, lumber prices are up over 300% from April of 2020. Business Insider estimates this adds nearly $36,000 to the cost of building a new home. But what about rebuilding a home? Building a home is more expensive than buying a home. Homeowners Insurance offers replacement cost, which is what it costs to rebuild your home from the ground up in the event of a total loss.
This is why having an accurate replacement cost for your home is important. The amount of insurance to rebuild your home will always be different from what your home can be sold for, the market value, and what the county assesses the value of your home. You may see the replacement cost of your home increase more than you are used to partially due to the higher cost of lumber.
As agents, we ask a lot of questions about your home, review pictures of the exterior and use a lot of information to determine the most accurate replacement cost for your property. Insurance carriers then use software (Expert Valuation System/e2V, Marshall & Swift) to calculate the approximate reconstruction costs for your home. The cost of lumber is just one obvious factor that determines the replacement cost on your home.
Rebuilding your home will cost more due to the increased cost of lumber, so reach out to your home insurance agent.
We are always happy to review your policy with you. Contact us today at 800-832-4689!
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Kim has been with MAX since 2011 and has over 20 years of experience in the insurance industry. When Kim is not at work, she loves to travel, cook and read. Kim and her husband of 35 years are involved with Retrouvaille, a ministry that helps married couples strengthen and heal their marriages. She has three grown daughters, two sons-in-law and two grandchildren. Kim enjoys the spring and summer months where she can tend to her garden.