I hate to keep visiting this topic, but I thought this might be interesting to some of you.
When people started going back to work, we were hoping that life might start returning to normal. Maybe that was too much to ask.
It is times like this, though, that we realize how global our whole economy has become. I remember when President Trump started his hard stand with China and our trade policies. This affected some of our building material options, but mostly it impacted our flooring.
Though it caused some headaches, the real trouble with building our senior communities, and all new homes for that matter, began this year with Covid.
Supply and Demand Craziness
Too much demand, too little supply
As soon as the recession was confirmed this year, everybody decided to do their part to correct the issue. Governments enacted unprecedented stimulus, and individuals stuck at home got bored and started buying tons of stuff.
On top of that, everyone has been so inundated with the idea that if you buy into the stock market when its low, then you make more money as it goes up. Well, it seems that all of this ended up boosting a large portion of the market. However, with all this spending and buying, nobody was actually working.
Now we’re faced with a three month shortage in over half of our raw and finished building materials.
Since April and May in Utah, we’ve seen a significant increase in the demand for homes. Communities that we thought would take till the end of the year to sell out, are already sold out now.
This is great from a selling standpoint, but from a building standpoint, its a shock. Considering that most of our materials come from out of state, many from places that were fully shut down for three months, we’re now struggling to find enough materials to build how we need.
The first thing we noticed to take a hit was appliances. For the last two decades, we’ve been proud to offer GE appliance to our customers. A couple of months ago, after we robbed all of our model homes of our GE appliance, and got no confirmation of when we’d ever be able to see another GE package, we were forced to switch to other brands.
Then we started seeing a major shortage on trim supplies, like doors and moldings. All of a sudden, many of these parts, much of which comes from out of state, were depleted.
Imagine our surprise when lumber jumped in price by a whopping 50%. Crazy! That’s not the end of it either. Continuing lumber shortages are threatening another 50% price hike in the near future.
Almost every branch of construction is facing some kind of shortage. This is resulting in higher prices and longer wait times. Items that were almost guaranteed to be in stock now are unlikely to be available for at least another three months. Longer in some cases.
What to do
I’ve heard of some builders who’ve begun stockpiling materials and equipment. Do you remember a few months ago when people did that with grocery stores? Yep, it’s happening right now, but with construction companies.
Many of them aren’t comfortable that the items they need over the next year will be available, so they’re adding to the problem.
Since construction time-tables often take on the form of several months, even years of planning, these short-term delays, while they may get resolved by the end of the year, may impact scheduling and budgeting headaches that last well into next year.
This requires all of us in the construction industry to be on our game, keeping our orders and lead times planned accordingly. Still, even with the best of plans, we’re all going to be struggling to keep the pipeline flowing flawlessly.
It’s funny, but every time I think that this year couldn’t get any more weird or challenging, it does. Best of luck to you and yours. Here at Leisure Villas, we’re doing our best to keep things moving along so that you can move into your ideal community with as few headaches as possible.