Construction of houses, improvement season framed by rising costs, demand | Best Stories


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The 2021 home construction and improvement season is based on uncertainty.

Prices, due to supply and demand, are on the rise and / or fluctuate wildly, which means that project prices have become difficult to set for many entrepreneurs. Some have had to recalculate for their clients in order to cope with the uncertainty.

Bradford A. White, president of White’s Lumber & Building Supplies on North Rutland Street in Watertown, has perhaps the best advice for anyone planning a repair, new home, or home improvement project in the coming months:

“Plan ahead and anticipate the unexpected,” he advised.

For example, a few weeks ago there was a shortage of basic items for house projects. Fasteners, nails and screws were hard to find.

Ken Palmer, purchasing manager at White’s, said the shortage was caused by a shortage of shipping containers.

In February, the CEO of Denmark-based Maersk, the world’s largest shipping container company, told CNBC that container companies were experiencing a “significant bottleneck” as resurgent global demand began to “increase. capacity “, which also increased freight rates.

So those simple nails in your new deck or for that extra room can just increase the overall costs of these projects. But buckle up for the shock of the lumber sticker.

The price of lumber – from panels to plywood – has seen significant spikes.

“We have seen substantial, almost drastic increases,” said Bradford White. “I think I would be right to talk about historic price points.”

“Lumber, even general lumber, is up 50-75%, sometimes up to 100% of where it was,” said Elon R. Waugh, owner of Mighty Oak Construction, based in Lowville. “Plywood is up to double in some cases.”

Last year, the COVID-19 pandemic slowed the economy, including lumber production at sawmills. Now supplies are tightening as factories restart, trying to meet increased demand.

A Feb. 12 press release from the National Association of Home Builders noted, “Spikes in lumber prices don’t just sideline buyers during a period of high demand, they stall many sales and force builders to suspend projects at a time. while housing stocks are already at an all time high.

Lumber prices, according to the NAHB, have climbed more than 180% since last spring. “This price spike has increased the price of an average new single-family home by more than $ 24,000 since April 17, 2020,” the association noted.

At least two lawmakers, Representatives Jim Costa (D-Calif.) And Jodey Arrington (R-Texas), have written to President Joe Biden urging him to remedy the situation.

“The lumber arrived relatively on time,” said Mr. Palmer. “But the lead times are extended and some of these products are charged when they are shipped to us.”

These unknown prices can lead to recalculations of the cost of projects by contractors.

“All of my projects for this year have pretty much been scheduled since last summer,” Waugh said. “So that means whatever I have coming up this year, I’m actually going to have to go through it and recite everything. You can’t count on material prices close to what they used to be. When I book things this far in advance, it’s always knowing that the prices can change on the materials.

Simon E. Lashomb, owner of Potsdam-based Lashomb Construction, also informs his clients that project costs could fluctuate.

“People are generally understanding and people have also been quite patient,” said Lashomb. “There weren’t a lot of people who were difficult. People usually go for it with the idea of ​​trying to limit any unforeseen expenses that may arise. But COVID was out of the blue with it. This is something that simply did not surprise entrepreneurs. It surprised everyone. I think everyone was touched enough by this to be a little more empathetic. “

Rising prices for real estate projects and new homes are being closely watched by bankers, including Thomas H. Piché, president and CEO of the Carthage Savings and Credit Association.

“We had a lot of construction going on last year, and it was a little scary because nobody expected a 35% overall increase in costs, which was kind of what happened to a lot of people. people, ”he said.

A 20 or 30 percent increase in the cost of a project could have a big impact on the bill for a $ 200,000 or $ 300,000 house, Piché said.

“No one has that in their budget, so we’re very aware of that and are monitoring it very closely. A lot of our clients have done well because they had pre-contracts with contractors and everyone kind of stuck to them. Then we had others who saw significant increases and we had to work with them. As we are doing this year, we are going to take a look at things and make sure there is enough room to lend them more or that they have better reserves because construction projects are difficult at the moment.

Mr Piché recommended that people pre-qualify for home loans for a rough estimate of overall project costs, then select a contractor and get “hard numbers.”

“Then we work with the contractor and the borrower to make sure we have enough space,” said Mr. Piché. “Today we are making sure that there is enough room for overtaking, because things just aren’t as easy as they used to be.”

The increase in construction costs, Mr Piché said, is only linked to supply and demand, not to rising interest rates.

“The interest rates are very good,” he said. “They’ve gone up a bit over the past two months, and we might expect another quarter to increase, but they’re still in the middle of the three, which is still a very good interest rate.”

The pandemic has not slowed down the desire for new homes or expansions.

“Last year – and I think any banker or real estate agent will tell you – it was a boom. We doubled our turnover last year, ”said Mr. Piché. “It was crazy. And we’re seeing a pretty strong spring right now.

Business enterprises are also affected

Commercial construction companies are also facing increases in the prices of building materials.

Robert Porter, vice president of DC Building Services in Watertown, said significant price increases have been seen in materials ranging from steel to copper wire and plasterboard.

“It seems like every two to three weeks things go up 10 percent, 10 percent and 10 percent,” Porter said. “Steel is up about 30% from what it was a year ago. “

One project DC Building Systems is currently working on is the expansion of Roth Industries and Global Plastics, Watertown. Among the products that the company manufactures here are double-walled oil storage tanks. DC Building Systems was awarded a contract to build a 10,000 square foot warehouse and a 7,000 square foot manufacturing addition.

The cost of many commercial building materials “piled up” last April, Porter said at the onset of the pandemic.

“It worked its way over the summer to get back to normal. Now it’s skyrocketing, ”he said.

Porter is uncertain whether fluctuations in the prices of commercial building materials are the result of supply and demand.

“We don’t really know what is causing this other than speculation with the political news and so on,” he said.

The rise in the cost of steel may be linked to the tariffs imposed on Chinese steel by the Trump administration, Porter said.

“All that comes is, for the most part, American,” he said of steel products. “It kind of pushed this cheap Chinese steel off the market here.”

DC Building Systems notably manages price increases by stocking products. In the case of commercial projects, the costs are typically “capitalized,” Porter said.

“I buy things in advance that I wouldn’t normally have bought, like wire mesh – things that aren’t going to go wrong, but you have to buy them now, although I may not. not be needed until July, ”Porter said. noted. “Better to have it now than to have it locked up for what it’s going to cost you.” Who knows what it’s going to be in July?

Improve our environment

Mr Lashomb said his company has traditionally done a 50/50 split of exterior and interior work. Since the pandemic, this formula has increased to 75 to 80% indoors, as people spend more time at home. Kitchen and bathroom renovations are in particular demand.

Mr. Waugh has seen a surge in requests for additions.

“I have people who are planning to make additions on homes throughout this year and already next year,” Mr. Waugh said. “People are planning projects, I would say, probably double the last year and a half compared to what I’ve seen in previous years.”

Mr Waugh said the noticeable price increases also affected things like siding and shingles.

“The siding increases 10% to 20%,” he said. “I have been informed that the shingles increase by about six to ten dollars a square.”

One square of shingles covers 100 square feet of roof.

Mr. Waugh and Mr. Lashomb also struggled to acquire windows.

“Previously, you could get windows in one to two weeks, depending on where you got them from,” Mr. Waugh said. “Now you are looking at four to five weeks. “

The whites were creative in trying to solve the supply issues.

“We are using multiple sources that we have never used before,” Mr. Palmer said. “We were able to get, maybe not the same item from the same manufacturer, but a similar item that the contractor will pay for.”

Many vendors, Palmer said, have narrowed down the variety of items they manufacture to focus on their core products.

“It’s similar to what everyone saw in grocery stores this spring and last summer,” White said. “You were walking down the aisle and you could choose from four or five different brands, but now you have a choice of maybe one or two, and the rest is just empty.”

With all the price fluctuations and the uncertain supply of materials, the best advice for people considering a home project might be to wait.

“I think a lot of people expect material costs to go down over the next year or so.” Mr Lashom said. “So I think a lot of people think it makes sense to wait.”

“Some people just wait another year for things to stabilize, which makes sense, according to the project,” Piché said.

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