What Rising Demand for Skilled Trades Means for Your Next Rehab

Skilled trades are in stronger demand than they've been in years, and that demand may be showing up in both paychecks and renovation budgets in 2026. More than 80% of contractors report competing hard for craft workers, and 40% raised base pay more in 2025 than the year before, according to the Associated General Contractors of America. For real estate investors, that strength in the trades workforce could be translating into higher renovation costs and longer contractor lead times that may be worth planning around.

Why Are Skilled Trades in Such High Demand Right Now?

Electricians, plumbers, HVAC technicians, and general laborers may be some of the most sought-after workers in the country this year. More than four out of five contractors report difficulty filling hourly craft positions (82%) or salaried roles (80%), the highest share in at least three years, according to the Associated General Contractors of America's 2026 Construction Hiring and Business Outlook. Many firms are responding the way any employer does when good workers are hard to find: paying more for them. Forty percent of contractors increased base pay more in 2025 than they did the year before, and most of those raises landed in the 4-10% range.

That kind of demand could be a sign of how essential this work is. New construction, data centers, infrastructure projects, and renovation work are all pulling from the same pool of skilled trades. For real estate investors (REIs), one of the most practical takeaways may be that the crews doing this work are busier and better compensated than they've been in years, which naturally could shape what a renovation costs and how quickly it can be scheduled.

Kiavi Tip: Technology-enabled draw management can give real estate investors real-time visibility into disbursement status, which may help track project pace as contractor scheduling shifts throughout a rehab.

How Is Trade Demand Affecting Renovation Budgets?

Renovation costs are rising, and strong demand for skilled labor may be one of the main reasons. Average renovation costs per flipped home reached $69,000 nationally in Q2 2026, down from $79,000 in Q1. Tariff-related material cost pressure and ongoing labor cost inflation could also be cited as primary contributors.

Materials may be adding to the pressure too. Building material costs increased 6.7% over the past 12 months, according to the July 2026 NAHB/Wells Fargo Housing Market Index, with nearly three-quarters of builders reporting cost increases of up to 15% on the same house. For a real estate investor underwriting a deal today, that combination of rising material and labor costs could mean last year's renovation comps no longer reflect what a project may actually cost, which is one reason a larger contingency buffer may be worth building into a 2026 budget.

Kiavi Tip: Regional cost gaps also appear to remain wide. Where labor and material costs land tends to vary significantly by market, so a national average is a starting point for underwriting, not a substitute for local contractor quotes.

How Are Renovation Timelines Shifting in 2026?

Busy trades often mean busy schedules, and payoff timelines could be stretching in several markets as a result. Denver averaged 133 days from purchase to payoff in Q1 2026, reflecting longer timelines tied to larger-scale renovation projects, while Austin averaged 154 days, according to a special ATTOM and Backflip analysis of Q1 2026 fix-and-flip loan data. By comparison, Atlanta and Dallas-Fort Worth averaged closer to 90 days.

A longer timeline may not automatically be a problem, but it could change the math. Every additional month a property sits unsold adds another month of loan interest, insurance, taxes, and utilities, so a rehab that runs long because a sought-after trade crew is booked out a few extra weeks could quietly affect a deal's margin even if the renovation itself came in on budget.

Kiavi Tip: Building schedule buffers into the underwriting, not just cost buffers, could help real estate investors plan for this possibility rather than react to it.

How Can Real Estate Investors Plan Around Strong Trade Demand?

Busy, well-paid trades may also be a good sign for the workforce, and real estate investors could plan around that strength rather than compete against it. A few approaches might help:

• Get multiple contractor quotes before closing, rather than after, to lock in pricing and confirm availability
• Build relationships with 2-3 reliable contractors per trade instead of relying on a single crew
• Size the renovation contingency to the scope of work, with more cushion for projects touching electrical, plumbing, or HVAC systems
• Consider bulk material purchasing across multiple active projects to help manage per-unit cost increases
• Sequence trades early in the scope of work review, so scheduling fits are confirmed before the loan closes, not mid-project

Example (hypothetical):

Actual terms vary by lender, market, and deal specifics.

A decision framework could also help match strategy to scope:

• If the project is cosmetic only: fewer trades may be involved, so scheduling is typically easier and a standard 10% contingency may be sufficient.
• If the project touches one or two systems (electrical, plumbing, or HVAC): those are some of the most in-demand trades right now, so consider building in extra lead time and a larger contingency.
• If the project is a full gut or involves structural work: real estate investors may want to line up every trade before closing, since a scheduling gap with one subcontractor could hold up the entire draw schedule.

Kiavi Tip: For a deeper look at how draw schedules, contingency reserves, and cash reserves work together when a rehab runs over budget, see how to plan for renovation cost overruns.

Final Thoughts

Strong demand for skilled trades in 2026 could be reshaping renovation budgets and timelines, but it's also a sign of how valued this workforce has become. Real estate investors who build strong contractor relationships, right-size their contingency reserves, and underwrite schedule considerations alongside cost may be better positioned to keep projects on track.

Real estate investors ready to move on their next deal can price out a bridge loan in minutes.

Sources

• 2026 Construction Hiring and Business Outlook, Associated General Contractors of America and Sage, January 2026
• Building Material Prices Increasing for Home Builders, National Association of Home Builders, August 2026
• Special Analysis: How Pricing, Renovation Costs and Timing Shaped Returns in Q1 2026, ATTOM, July 2026
• JBREC + Kiavi Q2 2026 Fix and Flip Survey: What the Data Means for Your Next Deal, Kiavi, August 2026