Understanding the Impact of Location on Home Service Costs

If you've ever been left speechless at how much (or how little) your friend or family member paid for their renovation or remodeling project in a different state, you'll know the cost of home services can vary significantly by area. The difference usually boils down to how much it costs to run an electrical, plumbing or HVAC business where you live.

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Checking the national average costs of different home services can help you estimate how much you'll pay. However, your home services professional may quote significantly more if you live in an area with high labor costs or challenging features. Meanwhile, you might get a pleasant surprise if you live in an area with affordable living costs. Let's delve into why home services cost more in some places than others.

The factors affecting the cost of home services are complex, making it challenging for homeowners to estimate how much a renovation or remodeling project will likely cost. Some factors to consider include the following:

Cost of Living

The higher the cost of living in your area, the more you'll likely pay per hour to hire an electrician, plumber or HVAC technician. That's because it's also expensive to work in areas where essentials such as groceries, housing and utilities cost more than average.

Generally, cities have higher costs of living than rural areas, so you should expect to pay higher rates in an urban community. However, the cost of living also varies by state. Generally, the Midwest and Southern states are the most affordable places to live, with Mississippi topping the chart as the state with the lowest cost of living. Meanwhile, the top five most expensive states are:

• Hawaii
• Massachusetts
• California
• New York
• Alaska

Local Costs of Labor

The local cost of living significantly impacts the going rate to hire a plumber, electrician or HVAC contractor, but it doesn't paint the whole picture. Factors such as tax rates can make hiring a home services professional more expensive, even in areas with relatively low living costs.

Contractors often charge more in areas with more stringent licensing requirements. For example, hiring an electrician for your remodeling project could cost significantly more if your state charges high licensure fees.

Another factor to consider is supply and demand. Home services professionals can charge more in areas with a shortage of electricians, plumbers or HVAC technicians because they don't have to compete with other contractors for work. Conversely, remodeling or renovation projects could be significantly cheaper in areas with an abundant supply of home services contractors.

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Environmental and Location-Based Factors

Even if you live in an area with relatively low hourly rates for labor, your renovation or remodeling project could still cost more if there are challenging local features. For example, certain plumbing jobs could take significantly longer if your pipes are buried deeper than usual. For example, in Minnesota, water service line pipes are buried over 8 feet deep on average. But in Florida, pipes are only buried about 2.5 feet underground.

Home services usually cost less per hour in rural areas, but that doesn't necessarily mean your project will be cheaper overall. Deliveries of materials can be more challenging in certain locations, so your contractor may spend more time arranging logistics than in an urban area. Some companies also charge trip fees if you live a long distance from their central offices, which can add significantly to your project costs if you don't have a suitable contractor in your area.

Permits

Permit charges are separate from home service rates. However, you'll likely reimburse your electrician, plumber or HVAC professional for any permit fees because home services professionals usually obtain permits on behalf of their clients.

Not all home repairs or upgrades require a permit. However, you'll usually need a permit for the following projects:

• Building an addition
• Knocking down a load-bearing wall
• Installing new electrical wiring or circuits
• Making changes to a sewer line
• Installing a new fireplace or wood burner
• Installing a new HVAC system
• Installing a new water heater

How much you'll pay for permits for your renovation or remodeling project varies significantly by jurisdiction. For example, a water heater permit could cost between $25 and $250 (CAD 35 and CAD 335), depending on where you live.

Generally, permits cost more in historical areas than in modern settlements. Some jurisdictions waive permit fees for like-for-like replacements of HVAC units or projects below a specific value.

All CAD conversions are based on the exchange rate on the date of publication.