Why Building Materials Cost So Much Right Now
If you're trying to do repairs, or build a new property, chances are you've noticed a large change in how much you can afford. People with tight budgets are aghast this year because lumber and other building supplies have risen at an average rate of 25% of their cost in the last year. This is a huge leap since most building projects are already incredibly expensive.
Unfortunately, there's no single culprit for this; many things went wrong to leave prices where they are today.
Who Is It Affecting?
The building material expense is touching almost every industry that exists. Homeowners can't do projects to up the value of their homes, and builders who create new houses are having problems keeping costs down despite doing the same work they always have.
These prices also affect everyone from large construction companies to DIYers and everyone in-between: there's nobody left unbothered by them. Building materials are something that everyone in the country benefits from, so an up in price is immediately noticeable.
Many construction companies and contractors have gone bankrupt or had to close their doors because of this boom in pricing, which is putting thousands of more people out of work at a time when more people need the profession than ever.
Lack of Laborers
In the spring of 2020, when the Covid-19 pandemic was beginning to rear its ugly head, many people did what they saw as the only reasonable choice and stayed home to protect themselves and their families. Unfortunately for the industry, this means there was a large drop in production at all parts of the process.
The laborer and worker numbers aren’t fully back up to 100% yet, because of pay disputes and many people waiting until their entire family is vaccinated. Unfortunately, this means these shortages might be here for longer than anticipated.
From wood glue to electric heating systems, all building materials saw an unexpected drop in how much was being produced. Yet, the employees quitting or taking time away wasn't the only issue.
The Need to Limit Shift Work
Many companies understood the importance of protecting their employees. For example, in manufacturing, many people usually packed closely together to create items and have assembly lines run smoothly.
However, this had to be limited to protect more people's health. The result of these limitations was that there were even fewer employees on shift at any given time.
In a moment where most people were trying to stay home, businesses had to comply with what current information the CDC had and limited the work people could do. This, of course, directly affected how many different types of siding and millwork were produced, which means that there was a mass scarcity nationally for many items that we’d taken for granted until now.
Companies Were Unsure What to Expect From Covid-19
Since there hadn't been a major pandemic that was so easy to spread in a hundred years, there were no clear business models to base around this. Instead, companies saw a large boom in purchases in the summer of 2020 and thought it would immediately drop off once the pandemic slowed.
So, to avoid creating too much product and ending up with a large stock of items they couldn't sell, businesses that generate anything from steel buildings to simple nails and screws held back and produced less.
They did this to try and be less wasteful, but they were ultimately wrong.
Demand Skyrocketed
For countless reasons: construction came into high demand. People were aching to buy more building materials, and it was suddenly obvious that companies had underestimated what people would want.
As a result, the housing market started booming again, with the entire country slipping into a sellers' market, which meant that every single person listed earlier was desperate to get their hands on building materials.
Anything from metal studs to composite wood was like gold because it was getting snatched up so quickly.
Companies couldn’t keep up with this demand.
Because of the scarcity of so many of these materials, prices were raised to balance them out. Businesses hiked prices up by 110% in many cases, adding what could be considered a post-pandemic tax to ensure they didn't run out of stock. As a result, many items are still getting snatched from shelves the moment they touch them.
Covid-19 Changed Everything
Nobody could have predicted how 2020 would have changed everything when it comes to building supplies. Nevertheless, it can't be understated how much Covid-19 affected, and we'll probably never know the full extent of its changes.
Building materials are at some of the highest prices that have ever been seen and are still scarce despite businesses ramping up production to try and meet demand. The good thing is, this change is temporary, and eventually, demand and supply will even out. For now, be careful about how much of something you buy and consider if this is a project that can wait a little longer until prices even out.
Andrea Erickson is a contributor to Innovative Building Materials. She is a blogger and content writer for the real estate industry. Andrea is focused on helping fellow homeowners, contractors, and architects discover materials and methods of construction that increase property value, maximize energy savings, and turn houses into homes.