If you’ve started building or remodeling your home recently, congratulations! And also, condolences.
Congratulations is due because the shortage of construction workers in Central Oregon has forced you to wait much longer than usual to begin your project. Most quality builders in the region are booking six months out, at least. Unfortunately, that delay has cost you big time on costs of materials and availability.
What’s driving these unprecedented price hikes and back orders for construction supplies in Central Oregon?
According to Hank Hill, owner of Bend Craftsmen Company, both issues can be tracked in part to the economy and a summer of wildfires.
“Times are the busiest a lot of us have ever seen,” says Hill. “Material prices have been fluctuating a lot and some of my preferred vendors, especially for appliances and tile, have seen significant back orders and delays.”
Damon Runberg, regional economist for the Oregon Employment Department, supports Hill’s observations with hard numbers. In late August, during a Central Oregon Builders Association presentation, Runberg noted that the only Central Oregon economic sector to see positive gains in 2020 is construction, growing at a rate of 2.8%.
In conjunction with this growth, a backlog for lumber supplies started earlier this year after mills in both Oregon and Washington were shut down or had significant layoffs due to the economy. Construction work continued in Oregon, and as the economy got moving again, people were unable to return to the mills or weren’t rehired. Lumber supplies quickly disappeared as did larger appliances from local suppliers, further straining builders’ budgets and timelines.
Ryan Jennings, operations director for Redmond-based Hayden Homes, said during the COBA presentation that there’s been an 80% uptick in costs since April. At that time, 2x4s or narrow lumber purchased in bulk cost $300 per 1,000 square feet. As of late August, that cost jumped to $835 per 1,000 square feet. Jennings notes this hike adds thousands of dollars to the price tags of new buildings and exacerbates the ongoing housing crisis.
Aaron Brent-Fulps, owner of ABF Construction, also reports during a visit to Home Depot in early October that plywood normally priced at $16/sheet was selling for $46.
As a result of these increases, Builder magazine calculates an increased cost of about $16,000 for the typical new single-family home. Sadly, the situation is not likely to improve soon as the rebuilding of infrastructure damaged or destroyed during Oregon’s summer fires is expected to spark another peak in lumber demand.
What can you do to minimize the damage?
In a high-demand building climate such as the one we’re in now, Karna Gustafson, vice president of government affairs and legal counsel for COBA, encourages consumers to check that their contractor has a Construction Contractors Board license.
“Especially post this summer’s wildfires, there is serious concern that fly-by-night contractors will have ample opportunity to take advantage,” she said.
In addition, Hank Hill recommends that consumers should work to establish a “cost-plus” format with their builders, or to include contingencies in contracts that will cover unexpected extra costs.
“If a contractor prepares a proposal now, but the project starts in six to 12 months, it can be wise for both parties to have another assessment of pricing and cost prior to construction commencing to re-evaluate.”
In any case, the one saving grace that can offset increasing construction costs is that home values in Central Oregon have continued to skyrocket, setting multiple records for median prices. Which means you could recover those extra construction costs just as quickly as you accumulated them.
Some information provided by K. M. Collins.