Construction costs rise in 2021 due to skyrocketing lumber, concrete, copper prices and labor shortage, experts say
Framing for one of the Habitat for Humanity houses is typically $ 6,000, but this year it was $ 12,000.
“Just for the basic framing of lumber,” said Jen Parks, who heads Habitat for Humanity in Chicago.
His team saw a timber crisis coming. As prices skyrocketed in the spring, the organization launched a new phase of affordable housing in West Pullman.
âI’m really grateful to my team who was in front of them for saying that we have to buy now, so we avoided further increases,â Parks explained. “It was a choice of our team to say let’s go and get it now so we don’t have to pay those higher costs down the road.”
Park’s team overbought lumber when prices doubled, saving them from having to buy more as prices tripled later that summer. This decision kept them on track to build these 14 new homes.
Lumber prices have recently fallen, allowing Parks to rest for future projects. But other construction costs remain high.
âThe price of concrete keeps going up. So every time we put in a foundation, the cost on concrete has gone up about 13% from normal. We’ve seen the same thing with copper, you know, copper plumbing, âParks said.
âThe steel industry, the copper industry are also facing similar pricing issues, you know. A lot of it is, you know, these issues in the supply chain. is a labor issue, where they don’t have the supply of labor, they don’t have enough employees working in their factories or factories, so they just can’t be at 100% capacity for full production, “said Sean Coary, an economist at Loyola’s Quinlan School of Business. He said the pandemic had hit the supply chain hard.
âMuch of the cost of the raw materials we use to build houses is imported from other countries where the vaccine is not readily available, and therefore their factories are or have closed or have reduced capacity, simply because ‘they do not have the capacity to know how to vaccinate their workers to operate in safe conditions, âCoary added.
There are three construction projects underway in Elmhurst School District 205 that are now over budget due to rising costs.
Millions will need to be added to the project budget to cover the 21% cost increase, as voters approved a bond for the plan in 2018.
If you’re building a house, see if you can lock in the construction costs up front in the contract. Financial experts from Forbes Advisor said record interest rates could offset rising construction costs.
Habitat hopes costs will eventually come down to stay on track with next year’s plan to continue to revitalize neighborhoods.
“Long term? The concern is how many houses can we keep building, and can we stay at that level, you know, at that double digit level can we keep doing 11, 15, finally get there? to 20 or more homes per year, âParks said. “If these costs continue to increase year on year, we’re really going to have a hard time keeping up.”
Experts say anyone can guess when construction prices are going to come down, if ever.
The industry is also facing shortages of skilled workers like electricians, plumbers and carpenters as fewer people have entered the trades. This increases labor costs, creating another challenge for construction projects.
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