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The cost to rebuild a damaged home went up approximately 3.95 percent nationwide last year even as real estate prices were declining, according to a study by a technology firm.
Orem, Utah-based Xactware said in Phoenix, the hardest hit metropolitan region, where average home values fell 32.9 percent in 2008, the rebuilding cost went up 5.38 percent.
Its findings, said Xactware, point to the need to keep updating insurance coverage based on construction costs.
The firm said changes in cost, according to its reconstruction cost index, showed the top five states were led by Alaska, where they soared above 8 percent, followed by Nevada, at over 6 percent. Hawaii, Texas and Georgia were all above 5 percent.
In its regional year-end median cost to rebuild on a per square foot basis, Xactware said for premium homes the cost was nearly $600 in Hawaii, with Northern California, Alaska, Southern California and Florida all at or slightly above $500.
The firm said the construction industry is still coping with the effects of high gas prices “months after they have dropped.”
The cost of 25-year composition shingles, it reported, jumped 71.4 percent, and lumber went up 2.8 percent, with drywall rising 5.77 percent.
Despite a lack of high-profile disasters in 2008, Xactware said the number of insurance claims was higher in 2008 and the total dollar amount reported to Xactware was just over $23.8 billion compared to $13.9 billion in 2007.
According to the company, despite higher costs the pace of increases has slowed and its material and labor index increased 3.16 percent in 2008 compared with 5.87 in 2007.
The study found that average “retail” labor rates for insurance repair work increased 5.43 percent in 2008 compared with 7.68 percent in 2007.
Overall, Xactware said, labor costs have continued to rise over the past several years despite the downward trend in the economy.
More information is available at www.xactware.com.