Why Construction Delays & Prices Will Return After A Short Pause

  • 4 min read

From the charming landscapes of Maine to the vast expanses of Texas and the sunny shores of California, the real estate industry is experiencing a rollercoaster of challenges, especially in construction. As we approach late spring in May 2022, there’s a prevalent topic making headlines—real estate dynamics, construction delays, and the omnipresent influence of inflation.

Navigating the Construction Landscape

Even in this seemingly tranquil period, whispers of real estate uncertainties echo across the nation. The headlines might suggest a dip in real estate, but the underlying narrative revolves around the steadfast presence of inflation, affecting every facet of the construction industry.

Inflation’s Firm Grip

Inflation has become an unwavering force, impacting construction costs on multiple fronts—lumber, materials, and labor. The domino effect is evident, leading to delays that show no signs of abating. A local news report from Maine sheds light on the pressing issue—builders grappling with shortages in both labor and materials.

Beyond Lumber: A Broader Picture

While lumber takes the spotlight in the construction narrative, there’s more to the story than meets the eye. Materials ranging from sheetrock to siding, roofing, and intricate interior fixtures are equally affected. PVC, crucial for trim parts and plumbing, is facing shortages, leading to unprecedented challenges.

Unpredictable Pricing and Delays

Veteran builders with decades of experience are expressing astonishment at the rapidly changing landscape. Prices surge by 20% or 30% within a short span, leaving builders in a precarious position. What seemed like a $15,000 investment for materials one day can swiftly transform into a staggering $28,000 cost, leaving builders and homeowners alike in shock.

Ripple Effects on Timelines

The repercussions extend beyond the financial realm. Delays become a harsh reality, challenging the initially estimated timelines. A construction project slated for a six-month duration might now stretch to nine months, impacting both builders and homeowners.

The Builder’s Conundrum

Builders, reliant on the predictability of their schedules, face a complex dilemma. Projects that once seamlessly fit together like Tetris blocks now require meticulous planning with added buffers. Any gap in the timeline becomes a period of unused equipment, idle employees, and ticking expenses.

Supply Chain Woes

The root causes of these challenges are intertwined with the intricacies of the supply chain. Manufacturers, caught off guard by the surge in demand, struggle to catch up. Shortages in vinyl, a key component for PVC boards, disrupt the production line. Factories face a dual challenge of material and labor shortages, amplifying the crisis.

The Great Resignation and Trucking Woes

The great resignation phenomenon further exacerbates the situation. Jobs in manufacturing plants, especially those involving materials like PVC, witness a decline in manpower. Quarantines due to COVID-19 add an extra layer of complexity, hindering the available workforce. Trucking, a lifeline of the construction industry, faces hurdles with rising fuel prices and selective job choices by trucking companies.

Windows, Doors, and Glass Shortages

Windows, doors, and glass—integral elements of any construction project—are not immune to the chaos. Shortages in tempered glass and raw materials for frames contribute to extended waiting periods, affecting the entire workflow.

The Dwindling Ambitions in Construction

As the real estate market seemingly cools off, builders confront a daunting reality—fewer building permits. This decrease stems from a pragmatic approach by builders, reluctant to embark on projects with unpredictable costs and delays. The reduced supply of new homes further propels the resale market, creating a cascading effect.

The Builder’s Dilemma: A Vicious Cycle

Builders, faced with fewer projects, recalibrate their pricing to cover fixed expenses. This adjustment, however, leads to higher costs for clients and a dwindling pool of potential homeowners. The shrinking backlog of new homes further intensifies the cycle.

The Impending Housing Crisis

The ripple effects extend beyond the present, hinting at a potential housing crisis in the years to come. The dearth of ambitious projects, coupled with uncertainties in the real estate market, paints a grim picture for the housing landscape.

Share Your Thoughts

In this intricate dance between inflation, delays, and supply chain challenges, we invite you to share your thoughts. How have these dynamics affected you? Are you witnessing similar challenges in your region? Join the conversation in the comments below and stay tuned for more insights into the ever-evolving landscape of the real estate and construction industry.

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