‘Tense construction’: Reno home builders play ‘long’ and ‘safe’ game as supply chain, labor issues persist

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In this 2018 photo, HomeCrafters teams are working on a house in the community of Pine Bluff in Caughlin Ranch, which the Reno homebuilder completed in 2020. Courtesy photo


Troy Means, part owner of Reno-based home builder HomeCrafters, recently received a letter from a concrete supplier, advising them of a 25% increase in the cost of precast products.

There was more. The supplier was also increasing labor and truck rental charges by 15%, which equates to a price hike of $ 10 per hour.


Two years ago, Means and his brother and part-owner of the business, Travis, would have had wide eyes to receive such a notification. Now, more than 18 months after the start of the coronavirus pandemic, they are barely blinking.


“We receive ‘letters of increase’ from material suppliers every week,” Troy Means said in a telephone interview with the NNBW. “Each year we would receive notices of significant price increases from some vendors, but not nearly in the extent and frequency to which they occurred during the pandemic… and the magnitude of the increases.”


Since last spring, Means said HomeCrafters has seen construction costs climb from $ 70,000 to $ 85,000 per house compared to before the pandemic. Additionally, persistent crimps in the supply chain add “three to four months” to the company’s home construction schedule.


HomeCrafters was the developer of Pine Bluff, the most recent area of ​​Caughlin Ranch that completed construction last year. The community consists of 43 semi-custom homes that span 26 acres.


Notably, the HomeCrafters brothers are the sons of Alan Means, co-developer of Caughlin Ranch, who began building there in the 1980s.


Troy Means said the ngo
The material shortages and resulting inflations are unlike anything he’s seen as a builder.

HomeCrafters co-owner Troy Means says construction costs have increased from $ 70,000 to $ 85,000 per house from pre-pandemic levels. Courtesy photo

“We are waiting a long time to receive these goods compared to 18 months ago,” Means said.

‘TENSIONED CONSTRUCTION’


This is arguably the biggest challenge that northern Nevada builders like HomeCrafters have faced since COVID struck as they strive to meet the region’s booming housing demand that has been accelerated. by the pandemic. And he’s showing no signs of slowing down.


A combination of a growing economy, more Millennials building families, and changes in where people and businesses can locate due to the remote working revolution suggests that the need for new homes in northern Nevada and beyond will only increase.


According to Freddie Mac, at the end of last year, there was a shortage of 3.8 million single-family homes in the United States to meet long-term demand – and this struggle was compounded by the difficulties builders had not only to secure. materials, but also hires skilled labor, Means said.


“It worries me that we have lost a percentage of our workers who still have not returned,” he said. “Unfortunately, this has created a situation that if the workers who have left do not come back, then we have to find a way to bring more workers into this industry.”


On the materials side, one of the first indicators of the severity of supply chain problems came when lumber prices started to climb last year. However, many of those issues have since been resolved, with prices falling in recent weeks by more than 60% from their all-time high of around $ 1,500 per thousand board feet in May of this year, according to media reports. .


Yet building a home takes more than wood, and builders are dealing with other materials that are in short supply, from garage doors to vinyl siding, said Steve Thomsen, general manager of Ryder Homes of Nevada. , a long-time community developer in the greater Reno-Sparks.

In this 2015 photo, Steve Thomsen, Managing Director of Ryder Homes, examines plans at the site of the company’s Shadow Ridge housing project in Spanish Springs. Courtesy photo

“The supply chain with construction is just broken right now, so it’s difficult to finish the houses,” Thomsen said. “The market is great, but the construction side is tight, and it’s stressful for our superintendents and project managers to build right now.

“And not only is it tense, but the costs have skyrocketed. Our construction costs over the past 18 months have increased by almost 20-25%.


Ryder Homes is one of Somersett’s original developers in West Reno. The company has built nearly 400 homes there in five different communities, including a 64-home subdivision that was completed in January, according to previous reports.


Means added that another factor “detrimental” to home builders is the lengthy regulatory and licensing process.


The time it takes to buy land, go through the rights allocation process, put in place infrastructure and start going vertical is now a “two to two and a half year process,” he said. -he declares.


“The time taken to approve projects has increased considerably,” he continued. “It’s harder for us to react when there is such a demand to bring these homes to the market. It really has an impact on our ability to bring housing to the market.


“THE LONG GAME”


Despite the challenges, northern Nevada’s scorching housing market suggests that now is an especially good time to be a homebuilder.


In September, the
the median price of a home in Reno-Sparks was $ 530,000, a 20.5% increase from September 2020, according to the Reno / Sparks Association of Realtors.

Yet home builders such as Perry Di Loreto, president of Di Loreto Homes of Nevada, fear the area will become “extremely unaffordable” for potential buyers.


After all, the population of Reno-Sparks is expected to grow by over 100,000 over the next 10 years, according to the Northern Nevada Economic Planning Indicators Committee.


“We’re still a good deal compared to where a lot of people live, especially in northern California,” Di Loreto said. “But there is so much pressure in the market right now. And we cannot respond immediately.


To that end, Di Loreto said a home builder must have an inventory of land in order to “play the long game.”


He may know this better than any builder in the area. Di Loreto Homes is the primary developer of Damonte Ranch in South Reno, a community of 6,000 homes that Perry began designing in 1987. He said the first five plus years were spent planning Damonte Ranch even before that the company does not claim rights.


“We didn’t really break through on anything major until 1997-98,” he said. “It’s a long game. It’s a marathon. So if you’re trying to buy land now, with the prices you’re going to know, it’s hard to make the numbers work.


As such, Thomsen said having strong land positions is “more important than ever”. He added that Ryder Homes is “very well positioned for growth,” with enough land in reserve for the next seven years, including projects in Carson City, Spanish Springs and Lake Tahoe.


“We’re running out of land pretty quickly,” said Thomsen. “It’s very limited and there’s a lot of growth here. If you don’t have good land positions now, it will be difficult in the future.


Meanwhile, Di Loreto said Di Loreto Homes is not only playing the long game but also “a safe game” that moves forward as material shortages and “hyperactivity” in the market continue.


“We are committed not to go too far,” said Di Loreto, noting that the company builds around 100 units per year at Damonte Ranch. “We have not ramped up. We’ve been building to the same level since 2011. We want to build and produce just to the level where we can do a great job here.


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