“Our biggest problem right now is material costs are just ridiculous,” said contractor Ryan McCoon of Endura Performance Homes. “It’s insane what’s happening right now in the industry. And no one really has an answer for it.” They need to accumulate plenty of cash, choose a buildable lot, select a contractor who can find enough skilled trades workers to assemble a house, wait months or years for construction to begin — and then rethink their budget to account for increases in materials and labor costs.
“250 percent increase in a year — unbelievable,” McCoon said. “The average is between 3 and 7 percent annually.”
Lumber is the standout in recent price increases.
Bob O’Hara, executive officer of the Home Builders Association Grand Traverse Area, offers this advice to anyone planning to have a home built in the region: “Be patient and plan ahead.”
“Most of them understand that they have to be talking about next year at least,” said O’Hara. “They’ve largely been patient. Part of the reasoning behind that might be the high costs right now. Costs are skyrocketing this year. A lot of people had to recalculate their budgets for housing.”
Some buyers are willing to wait to begin construction because they hope prices for lumber might come back down after the coronavirus-driven materials shortages fade.
“Lumber prices have tripled from July (2020),” said contractor Scott Norris of Scott Norris Construction. “But lumber is only one piece of the puzzle on a house. There are other things haven’t gone up as much.”
Overall home construction costs are going up for several reasons. Two of the most important are lumber and labor.
Still, the overall cost of a new home burst through the roof during the COVID-19 pandemic.
“I would guess housing in the last year has gone up at least 20 percent, maybe more,” Norris said.
O’Hara doesn’t see a quick end to the trend of higher building costs.
“The demand is there, the supply chain problems are still there, so I foresee it probably continuing,” he said. “There have been some signs of the surge weakening, but no real reversal yet.”
High lumber prices and other factors also have affected commercial construction.
The builders exchange is a nonprofit that gives members access to project documents for commercial and industrial projects, so they can decide which jobs they want to bid on. Some commercial contractors are available for work despite the challenges this year, she said, but supply chain issues remain a factor.
“Some companies are already booked, some through the end of summer, some through December,” said Kendra Balderach, executive director of the Builders Exchange of Northwest Michigan. “Some people are not even bidding on projects right now,” because they’re already so busy.”
Demand for new housing continues unabated across northwestern Lower Michigan.
“Commercially, the timeline has changed due to the lack of supplies and the price of lumber,” Balderach said.
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