Construction of new homes has been delayed due to supply and workforce shortages. CREDIT STEVE GRAVELLE
In our new COVID reality, even a rapid economic recovery from a global pandemic has a downside. “A lot of (suppliers) closed down their factories during COVID, and there was talk we’re going into a huge recession,” said Joe Sattler, owner of Sattler Homes & Remodeling. “Then things got really busy.” “It seems that everyone […]
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In our new COVID reality, even a rapid economic recovery from a global pandemic has a downside.“A lot of (suppliers) closed down their factories during COVID, and there was talk we’re going into a huge recession,” said Joe Sattler, owner of Sattler Homes & Remodeling. “Then things got really busy.”“It seems that everyone is so busy, which is great,” Kevin McCreedy, co-owner of McCreedy-Ruth Construction, wrote in an email. “That also isn’t great for someone who wants a project done soon. If a customer calls today for a larger project, we are telling them at least a year out.”More building materials and components seemed to work their way through the global trade network this spring. But continued shortages of some supplies – and, more significantly, workers reassessing their goals and opportunities – are this season’s normal for Corridor building trades and would-be customers.“When I started building homes back in the ’80s, we had a production schedule of 66 days, 74 days or 92 days,” said Drew Retz, vice president of Cedar Rapids operations for Jerry's Homes. “Now, I don’t think I can build a home in nine months. We’re losing so much time on-site because we don’t have materials and we’re not sure when they will show up.”Mr. Retz estimated this year’s supply and workforce shortages could add $30,000 to the cost of a typical new home.“We’re trying to be upfront [with customers] with everything,” Mr. Sattler said. “When a job sells or orders are placed, we let them know: ‘We were able to start your project, but instead of a month or two, it may be two, three or four months.’”“People are just going to have to learn to be a little more patient and start planning ahead a lot sooner,” Mr. McCreedy wrote in an email. “Things are going to cost a lot more than things used to, and unfortunately that seems to be the new normal. We see and hear of price increases almost every week.”Neither COVID, workforce adjustments or even a land war in Europe have dampened Eastern Iowans’ demand for new homes or improvements to existing ones. Both Iowa City and Cedar Rapids issued more building permits last year than in 2019.While damage repair from the August 2020 derecho isn’t the factor it was last year, it’s prompting many projects.“I wouldn’t say it’s as nearly a factor as it was in 2021, but you drive around and you still see blue tarps and missing siding,” Mr. Retz said.
Longer lead times
The key to keeping projects on schedule, albeit usually a lengthier one, remains thorough planning, according to Jim McGrew, owner, president and CEO of Suburban Lumber in Cedar Rapids.“Some hardware items can be challenging, with a longer lead time,” Mr. McGrew said. “Cabinets and windows still have a lengthier lead time, but it’s come down in the past year. It takes good planning and good communication between us and the builder.”Most of Suburban Lumber’s business is supplying contractors, “but we do a fair amount of walk-in business” with homeowners who do their own work.“We’ve been able to get what we need to get by,” Mr. McGrew said . “It’s taken doing things differently. We’ve had to run with a heavier inventory. Windows and doors, you’ll want to plan ahead and have some lead time. If they’re planning to get that done before it gets cold, it might be best to get that ordered in the next month.”“Things are opening more back up with COVID, but supply chain issues and labor issues are more of a factor,” said Mr. Sattler. Windows, doors and cabinets remain difficult to schedule, and electrical components are hard to find.“Two years ago, most (windows) you’d order and you’d probably have them in two or three or four weeks,” Mr. Sattler said. “They’re not all custom, but most manufacturers made them to order. Manufacturers don’t have them sitting in a warehouse.”“Windows, doors and cabinets are taking anywhere from 10 to 16 weeks to come in, and sometimes even longer,” Mr. McCreedy wrote. “Some products are seeing longer lead times, or some products are not even available anymore.”Plumbing and electrical fixtures can be hard to find, and the composite boards used on porches and decks remain scarce due to labor and materials shortages, according to Mr. McCreedy.“Most lumber and sheet-good products are available, but the price hasn’t dropped too much on those products,” he wrote. “Suppliers still have higher-priced inventory in stock, and the shortage of transportation and high fuel prices to get the materials has added to the costs.”
Shortage of workers
For a third year, the global supply chain’s fitful recovery from COVID shutdowns has building components stuck at sea or in clogged ports, reducing supplies and raising costs for builders and buyers.When supplies do arrive, a tight supply of qualified workers means slower progress at higher cost.“We are definitely seeing a shortage of young adults entering the workforce in the trades,” wrote Mr. McCreedy. “I would safely say that you could ask anyone in the trades if they could use more help and more staff.”While crude-oil prices continue to recede from wintertime highs, uncertainties brought by Russia’s invasion of Ukraine continue to drive prices, with diesel fuel notably in short supply.“I don’t see the supply-chain stuff easing up at all for another year,” said Mr. Retz. “With China locking down, things out of China are going to be tougher to get.”Beyond supply, building materials are subject to higher shipping costs.“For lumber loads out there, there are still 70 loads per one truck available,” Mr. McGrew said. “That’s slowed down the lumber coming in. That’s been a big part of the cost of goods.”
Modifying strategies
Builders are adjusting business strategies to the new reality.“I’m not interested in selling a build-to-order [house] today because my clients aren’t going to be able to sign an escalation clause,” Mr. Retz said. “I can’t tell them when I can build a home.”Instead, Mr. Retz’s crews are building catalog homes on speculation – and finding plenty of buyers.“We are building homes all the time (on spec),” he said. “As soon as they listed them, they had all kinds of buyers. I delivered four homes last week. I didn’t have time to figure out what my costs are, because I’ve had price increases on all those materials.”In February, the Department of Commerce lowered import duties on Canadian softwood lumber, cutting tariffs on many products by 60%. But the long-running lumber trade dispute between the United States and Canada continues.“Prices are so high, tariffs are probably not a good idea,” Mr. Sattler said. “That’s priced a lot of customers out of the market for new building or remodeling.”There are signs the supply crunch may be easing.“We’re hopeful we’ll see some changes,” Mr. Retz said. "One morning I actually had four siding crews on site, so some things are improving over what they were six months ago.”Prices for some products have even come down lately, Mr. McGrew said.“In lumber and OSB, it’s fluctuated,” he said, referring to the engineered wood product oriented strand board. “Right now it’s lower than it was two, three months ago and earlier last year, when it really peaked.”
