Is your home underinsured? Higher lumber prices mean higher rebuild costs

Local News

COLUMBUS, Ohio (WCMH) — Lumber futures have fallen 40 percent since their peak in March. While this is a great sign for builders and people wanting to build a new home, this does not change that the current price of wood is still higher than last year.

Ultimately, this means that your home is worth more than last year and the cost of replacing or fixing the house is certainly going to be more expensive also.

This means you need to check how you have your house or structure insured. Certainly, your house is worth more today than a year ago. You need to call your insurance company to make sure you have it up to date.

Protecting property properly

Check your insurance policy, be sure you have your home insured properly. The prices of houses and lumber have increased substantially. If your home is insured at a price from one to four years ago and is damaged by a storm or fire, you may not have enough coverage to replace or rebuild what you have.

One of the first steps is to contact your homeowner’s insurance company/agent. Be sure to discuss the type of insurance you have and what you need to do if anything to make sure your house is valued correctly.

Nationwide Insurance based in Columbus, Ohio has the following information you need to be insured adequately.

If you have questions about your coverage, consult with your insurance agent or carrier. They should be able to review your current dwelling coverage and reconstruction cost estimate, confirm that key features of your home are accurately captured, and explain key coverages.

Another important callout is regarding dwelling coverage vs market value: Insurance dwelling coverage for your home should be based on reconstruction cost, not market value. Reconstruction cost considers how much it would cost to rebuild your entire home, with like quality of construction, in the event of a total loss – depending on factors like market conditions and home location, this can be higher or lower than market value. Most insurance companies have tools and formulas to calculate this reconstruction cost based on key home features. While the cost of materials would affect the overall cost to rebuild, fluctuations in market value do not affect replacement cost, and therefore the dwelling coverage does not need to be adjusted as home prices change.


Lastly: In order to ensure an adequate reconstruction cost for insurance coverage, it is important to ensure your carrier has accurate information regarding key home features such as square footage, number of bedrooms, bathrooms, etc. You should also notify your agent or carrier of any major home updates, renovations, and additions that could affect reconstruction costs.

Additional resources

Determining your property’s value

According to the National Association of Homebuilders (NAHB), appraisals are struggling to keep up with the rising prices.

One resource you can utilize to help determine your home’s value is the Franklin County Auditor’s website. Here you can find what other properties in your neighborhood have sold for in the past year, and how the county evaluated your property.

“We encourage all property owners to evaluate both for evaluation purposes but also look at other recent sales,” said Franklin County Auditor Mike Stinziano. “It will allow you to look at what the assessed value is, what other details of that property exist and is kind of a one stop shop for all the information you need for that specific parcel.”

The public can broaden their search efforts by utilizing the Auditor’s web reporter tool. The search can be expanded or narrowed based on the information that is relevant to what is being sought. Plus, there is a Monthly Sales Dashboard where people can look at sales during the past month for a specified area.

Affordable housing efforts

The NAHB suggests that affordable housing projects are being hurt by the surge in lumber prices. The city of Columbus has snubbed its nose and continues to announce new projects.

  • In June, Columbus City Council approved more than $4 million in grants for affordable housing. $2.175 million came from the 2020 capital budget for Sinclare Family Apartments at Alrosa Villa.
  • In May, the city of Columbus announced a $10 million investment to expand the support for affordable housing in the city. This money is for the creation, renovation, and expansion of projects city-wide. Included are 60 new residential units at Jenkins Street Lofts.
  • In April Columbus and Franklin County announced a competition among developers and architects to address housing affordability.

Lumber production in Ohio

Homeowners chose to take care of some do-it-yourself projects, restaurants were creating outdoor spaces, and then add the housing boom. This resulted in lumber yards trying to keep up with the demand. Basically, the supply was way short of what the consumer wanted.

The result was the price of wood-based building materials soared and increased new home construction by an average of $36,000. This was a 400 percent increase since the beginning of the health protocols in March 2020.

The products for framing and roof joists, or deck construction is not from Ohio. This product comes from “softwood” pine forests. This is supplied from the southeaster and western United States and Canada.

“Ohio is a ‘hardwood’ forest state. Oak, Maple, Cherry, Walnut, Hickory, etc. Ohio and its forests make the lumber that goes into flooring, furniture, cabinetry, trim and moulding, pallets, truck-trailer flooring, etc.,” said Ohio Forestry Association Executive Director Brad Perkins. “Our lumber and products are also in high demand right now, and prices have risen significantly over the past 9-12 months, but still not to the percentage level change of softwood lumber for the construction industry.”

The Ohio Forestry Association, Inc., is the oldest conservation organization in Ohio. The group’s goal is to manage Ohio’s forests in a sustainable way. From safety and training for loggers to focusing on water and soil conservation.

According to the OFA, Ohio’s forest impacts the state economy with $26 billion and employs 50,000. This amounts to 500 million board feet per year from 350,000 private landowners.

Copyright 2021 Nexstar Media Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

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