You want to start a home construction project, but from what you’ve seen on the news about supply issues and shortages, you’re thinking now might not be the best time. No one would blame you for that assumption, but it’s not necessarily the truth! To know whether or not now is the time to begin construction, you need to understand what’s happening in the home building industry, what’s causing it, and how it could impact your project. After we dive in, you might want to consider downloading our complimentary home building guide for more information on the custom home building process, or maybe check out our blog dedicated to construction timelines!
Over the past two years, there have been shortages of everything from groceries to cars to electronics and more. For homeowners and builders, shortages of construction materials, appliances, and labor have resulted in construction supply chain issues like shipping delays and bottlenecks. In addition, many construction materials have been discontinued, some without notification. Speaking from personal experience, this makes designing and pre-purchasing materials a real challenge. Even when we are able to find materials, lead times are much longer, therefore, delaying the project start which could lead to increased material costs or a change in the sequencing of how your project is built.
A May 2021 Housing Market Index Survey of home builders by the National Association of Home Builders and Wells Fargo speaks to the shortages currently facing builders across the nation.
The survey showed that 95% of builders were experiencing an appliance shortage, which is the highest shortage percentage recorded since the NAHB began collecting data in the 1990s. In addition, ninety percent or more of builders were impacted by shortages of framing lumber, oriented strand board, and plywood. And, to a lesser extent, builders reported a window, door, hardwood flooring, cabinet, and vinyl material shortage. Additionally, the number of builders who faced shortages for all of the 23 construction materials listed in the survey increased by 27% from the 11 months prior. Since this report, there are many of the items which were not major concerns at the time that have now become areas of concern due to delays. The main takeaway we have is that our focus needs to be much more on purchasing and being able to pivot when a change in the supply chain throws us a curve.
There’s also high demand for building materials and labor, which has led to price increases. Because there are so many variables that impact the prices of goods and services, it’s difficult to predict exactly how prices will change in the coming year. However, in October, the NAHB sent a letter to President Biden indicating concern over a possible spike in lumber prices this spring as lumber futures traded on the Chicago Mercantile Exchange are expected to increase 30% between March and May of 2022.
Why is it Happening?
There’s no one reason for the building supply shortages and supply chain issues impacting the industry. It comes down to a number of intersecting societal, environmental, and economic factors: wildfires in the West, a slowing world economy, rising transportation costs, labor shortages, the pandemic, flooding in lumbering regions, and on.
What Impact Will This Have on My Custom Home Project?
The specifics of how these industry challenges will impact you depend on your timeline, location, and the nature of your project. However, you should always plan some ‘buffer room’ in the case of delays and price increases of some kind. That doesn’t necessarily mean you should hold off on your home construction - or that these things are guaranteed to happen - but you should be aware of how shortages, delays, and rising costs could impact your project and, by extension, your life.
Timeline and cost are the two main areas of your project that could be altered. The high demand for building supplies combined with shortages means that people are willing to pay more for less remodeling or new home construction. So, you’ll want to build an extra cushion into your budget for unexpected cost increases. While you’re searching for a builder for your project, ask how they’ve been impacted by supply chain issues if you want to get a better understanding of prices in your local area. Additionally, ask questions about how the status of your budget will be communicated throughout the project timeline, how your prospective builder will stay transparent about costs incurred, and what the company’s buyout process is.
Your builder also may have to deal with drawn-out lead times for construction materials, which could cause remodeling or new home construction delays. In addition to the potential complications, this poses for building, if you have to make alternative living arrangements during construction it is likely you’ll have to extend your stay if the timeline changes.
At the end of the day, the best thing you can do is consult with your builder to see what challenges they anticipate for your project. They can help you plan for delays and price changes, tell you which materials they are having trouble accessing, and recommend compatible alternatives.
What is PAXISgroup Doing?
At PAXISgroup, we believe in integrity, so we’ll always be honest with you about the supply chain challenges facing your project and what it’ll take to overcome them. In addition, PAXIS is committed to providing cost-effective solutions while doing everything we can to prevent delays from messing up your construction timeline. For example, if we’re having difficulty obtaining a specific material for your project, or if the price of that material increases, we’ll work with you to find an alternative material that more closely matches your budget and timeline.
PAXISgroup will also listen to your concerns and be forthcoming in communicating anticipated issues as soon as they are brought to our attention. As part of our commitment to our core values — customer-centric, intentional collaboration, unrelenting integrity, prioritizing people, perpetual growth, and intense listening — PAXIS builds meaningful relationships with our clients, collaborates with industry professionals, takes responsibility for our mistakes, and is always seeking to improve.