Construction Claims – May 2024 - Revival Brothers Note and REO Investments

Defined Regions

CoreLogic curates this monthly bulletin of regional construction cost insights, which are reflected in the CoreLogic Claims Pricing Database. We combine the current month’s pricing data with four common loss scenarios to create models illustrating market impacts that are applied across nine regions and compared month over month and year over year.

Our experts provide detailed analyses of changes and trends to provide additional insight into key drivers. View our Construction Database Pricing Methodology white paper to gain additional insight into how we populate cost values.

May Pricing Insights

2024 Updates From the CoreLogic Pricing Analysis and Delivery Team

The CoreLogic Pricing Analysis and Delivery Team continues to research labor costs and industry best practices for all construction categories within the Claims Construction Cost Database. To standardize labor trade assignments in the CoreLogic Pricing Database, CoreLogic will continue implementing incremental monthly changes throughout 2024 for each respective trade category.

As part of the June Claims Construction Cost Database update, the following categories will undergo alignments to the labor trade assignments: Excavation, Antenna and Satellite Dishes, Vents, Cleaning Upholstery, Moisture Protection, Cleaning Lamps & Vases, Cleaning General Items, Demolition, Cleaning Electrical Items, Wall Coverings, Interior Furnishings, Miscellaneous, Metal Structures, Permits & Fees, Paneling & Wood Wall Finishes, Interior Lath & Plaster, Contents Packing, Handling & Storage, Fireplace, Temporary Repairs, Outbuildings, Drywall, Exterior Furnishings, Masonry, Light Fixtures, Insulation, Stairs, Cleaning Appliances, Electrical, and Fencing.

In addition to standardizing labor trade assignments, the Claims Construction Cost Database will continue to increase subcontractor overhead and material markup allowances across all trades during the first half of 2024, resulting in the single-digit upward movement of labor trade rates and material prices. These overhead and material markup allowances reflect escalating costs for subcontractors, such as increased vehicle acquisition and maintenance costs, real estate expenses, increases in software and other general office expenses, and increased job-site material delivery charges. Customers will also notice above-average upward labor rate adjustments to certain markets in the Western region in Q2.

CoreLogic will update the Construction Pricing Database Methodology white paper in the coming months to reflect additional considerations not previously outlined.

Line-Item Refresh

The May 2024 Claims Construction Cost Database release contains refreshes of the “Fencing and Interior Lathe” and “Plaster” categories. The realignment process will continue on a rolling monthly basis for all categories within the Claims Construction Cost Database. The “Metal Structures & Components,” “Antenna/ Satellite Dishes,” “Outbuildings,” and “Heat, Vent, & Air Conditioning” categories will be refreshed next, with updates in the June Claims Construction Cost Database release. The line-item realignment project will continue through 2024, and all categories will be complete by December.

All itel™ – based line items are updated in the May 2024 Claims Construction Cost Database release. These updates will include a new component breakout within the “Install” action to account for the associated material markup and handling costs relative to the comparable material components.

The June 2024, the Claims Construction Cost Database will begin to include a caulking component within most paint-grade interior trim items. The June Claims Construction Bulletin will include full details about which interior trim items are impacted.

Fire/Lightning (Large Loss) Insights: 12-Month Trend

In this category, large loss claims are modeled from a typical fire loss where all components of a home’s construction are affected. Losses typically exceed $100,000.

Since April 2024, this loss scenario has had minimal movement (+/-0.5%). This is due to flat labor rates and minimal month-over-month pricing changes to many material categories.
Average pricing increases were 7.1% year over year for this loss scenario. The Northeast (8%), Northwest (9%), and West Central (9%) surpass that average.
Painters’ labor rates rose by 8.7%, and general labor rates increased by 9.1% since May 2023. The Northwest and the West Central regions experienced more accelerated upward movement in both labor categories.
Since last year, the pricing for framing and rough carpentry materials has dropped by 12.2%, but cabinetry pricing increased by 16% since May 2023, offsetting this decrease.

Wind/Hail (Exterior/Roof) Insights: 12-Month Trend

This category represents losses due to wind and/or hail weather activity. Restoration from this damage requires roof replacement, partial siding replacement, and accompanying accessories.

Since May 2023, the average pricing for the wind/hail scenario increased by 12.9%. The Central (12%), East Coast (10%), Gulf Coast (11%), and Southeast (10%) regions did not surpass the average. The loss scenario saw minimal movement month over month.
Roofers and siding professionals across all regions saw an average labor cost increase of 8.3% and 23.3% versus last year, respectively. The Northeast, Northwest, Southwest, and West Central regions, in particular, have experienced even higher rate increases for siding professionals.
The year-over-year labor rate increases are offset by decreases in materials costs for fencing (8.9%), roofing (2.8%), and siding (5.6%).

Water (Interior Reconstruction) Insights: 12-Month Trend

Moderately complex losses are modeled for the interior water loss scenario using the bathroom as the origin of loss where a combination of replacement and repair of common household finishes is required.

Compared to this time last year, average pricing is up 9.4% for this loss scenario. Larger gains occurred in the Northeast (10%), Northwest (12%), and West Central (11%). Pricing in all regions moved less than .3% month over month.

Material	Change From May 2023 Pricing
Insulation	5%
Drywall	8%
Finished Carpentry and Trim Work	-2.6%

On average, year-over-year drywaller and cleaning labor rates increased by 8.4% and 8.6%, respectively. In these labor categories, growth rates ranged from 12.3% to 13.1% in the Northwest and West Central regions. On a monthly basis, both labor categories remain stable.

Water Mitigation (Drying) Insights: 12-Month Trend

Typical drying costs for a residential structure include water extraction, removal of wet material, and drying equipment usage.

Little month-over-month movement happened for the Water Mitigation scenario (-0.02%).
The average year-over-year development has increased by 8.4% with the Northwest (12%) and the West Central (13%) regions surpassing that average.
Water mitigation technician labor rates are 8.7% higher on average since last year and are accelerating the loss scenario increase. In line with the trend of other loss scenarios, the Northwest (13.5%) and the West Central (14.5%) regions have pricing that is significantly higher than the average.

About CoreLogic Data Research

CoreLogic develops this report using up-to-date materials and labor costs. CoreLogic’s team of analysts continuously researches hard costs such as labor, material, and equipment, including mark-ups. CoreLogic updates its database every month accordingly.

Our research also covers soft costs, such as taxes and fringe benefits, for reconstruction work performed as part of the insurance industry. CoreLogic monitors demographics and econometric statistics, government indicators, and localization requirements, including market trends from thousands of unique economies throughout the U.S.

Other factors in this process include the following:

Wage rates for more than 85 union and non-union trades
Over 100,000 construction data points
Productivity rates and crew sizes
Building code requirements and localized cost variables

Additionally, we validate cost data by analyzing field inspection records, contractor estimates, phone surveys, and both partial and complete loss claim information.

Please complete the online form to provide feedback or request information on any items in our construction database. Please contact your sales executive or account manager for additional explanations or questions. A more detailed methodology explanation can be found in our Construction Database Pricing Methodology white paper.

About CoreLogic 

CoreLogic is a leading global property information, analytics and data-enabled solutions provider. The company’s combined data from public, contributory and proprietary sources includes over 4.5 billion records spanning more than 50 years, providing detailed coverage of property, mortgages and other encumbrances, consumer credit, tenancy, location, hazard risk and related performance information. The markets CoreLogic serves include real estate and mortgage finance, insurance, capital markets, and the public sector. CoreLogic delivers value to clients through unique data, analytics, workflow technology, advisory and managed services. Clients rely on CoreLogic to help identify and manage growth opportunities, improve performance and mitigate risk. Headquartered in Irvine, Calif., CoreLogic operates in North America, Western Europe and Asia Pacific. For more information, please visit www.corelogic.com.

NOTE: The building material, labor, and other cost information in this bulletin is generated using research, sources, and methods current as of the date of this bulletin and is intended only to provide an estimated average of reconstruction cost trends in the specified general geographic regions of the United States. This cost information may vary further when adjusting claim values for specific property locations or specific business conditions.

Written by: Insurance Team

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