The bottom line & construction costs
What’s your number?
By Dan Kolbert
All photos courtesy Kolbert Builders.
"What’s your number?" is a regular column by Dan Kolbert, a contractor with more than 20 years of experience as a specialist in energy-efficient homes.
This issue’s number is the bottom line.
It is hardly a secret that construction costs have skyrocketed. While recent events have caused a spike, many of the factors are long-standing and won’t be resolved any time soon.
Beginning with the COVID-19 pandemic lockdown in March 2020, this chart follows the prices over three years of kiln-dried wood (KD), pressure treated wood (PT), 3/4” thick AdvanTech brand sheathing, 7/16” thick ZIP brand wall sheathing, and spruce strapping.
The most obvious recent factor is, of course, the COVID-19 pandemic. It has made everything far more complicated, slower and more expensive. Construction material prices in particular have been incredibly volatile. Since the beginning of the pandemic, I’ve been charting prices for a handful of common materials, including lumber. Prices have largely returned to pre-pandemic levels, but (a) there is no guarantee they’ll stay there, (b) there are still occasional, unpredictable spikes in the prices of individual items, and (c) there are continuing problems with availability.
The pandemic has exposed many long-standing problems with our supply chain. Some of them may be resolved, but others may be permanent. For Kolbert Building’s projects, we are warehousing more special orders than ever before, like cabinets, fixtures and appliances, to reduce the risk of not having them when we need them. Since there is rarely enough room to store supplies at a renovation site or secure spots in a new house build, we are keeping more of them at our shop, which adds cost and time to a project.
Labor has also gotten more expensive. This is, largely, a good thing for workers. At least part of the reason for the trades’ labor shortage is the historically mediocre pay scale. Combined with difficult, dangerous work, harsh conditions in summer and winter, and poor to non-existent benefits, it is not hard to see why parents have done all they could to discourage their children from entering the trades.
The result has been a shortage of skilled labor that long pre-dates the pandemic. I don’t have data beyond my own experience, but my observation as a builder of 20+ years is that a lot of people left the trades after the 2008 housing market collapse, and few of them returned when activity picked up afterwards. High schools have dropped shop and other Career and Technical Education (CTE) programs and adopted college-readiness for all as their education model.
Whatever one thinks of this shift, it has led to a trickle of young people becoming carpenters, plumbers, etc. We have a lost generation in the trades—older workers have no one to teach their skills and experience. Whereas previous generations were taught by skilled craftspeople 10 to 20 years their seniors, now, when these experts retire, all their knowledge goes with them because of a lack of trainees. According to the U.S. Department of Labor, we need at least twice as many people in the trades as we currently have.
The upshot has been a pretty sharp rise in wages recently, especially since the pandemic began. It takes a higher starting wage and decent benefits to attract people to these jobs, and higher wages to keep the current crew from going elsewhere.
As I said, I think this is for the best and long overdue. By being underpaid, tradespeople have effectively been subsidizing the cost of homeowners for centuries. The National Association of Home Builders (NAHB) says that wage growth has started slowing after several years of rapid increases, so we’ll see if the trend continues.
Finally, the cost of financing has been shooting up as well. After decades of low interest rates, 30-year fixed-rate mortgages are, at the time of writing, averaging almost 7%. This adds $500 each month to a $250,000 mortgage.
So where does this leave us? And how can we continue to improve the quality and efficiency of homes in the face of rising costs?
While the temptation grows to use cheaper materials and methods as costs rise, I think that’s being penny wise and pound foolish. Building for longevity becomes even more important when both initial and replacement costs are rising. If you can’t afford better materials now, how will you afford them when the mediocre ones you used fail in the short term? Not to mention doubling the environmental impact through premature replacement.
There are plenty of areas where economizing won’t have a big impact, and many alternatives may be equivalent, or even better, from an environmental perspective. Laminate counters, for instance, can easily last decades. They are far cheaper and require much less energy to produce and transport than stone or synthetic products. Asphalt roofing is likewise typically less than half the cost of metal roofing, requires much less energy to produce, and can easily last 20 years.
Focusing on size is always important, even more so as each square foot rises in cost. A smaller house is cheaper and faster to build and will cost less long-term to heat, cool and maintain. And the environmental benefits of reduced resource usage, both during construction and after occupancy, are obvious.
As fast as the cost of construction has gone up, the cost of energy has gone up even faster. So every dollar spent on energy efficiency will have an immediate positive impact on your overall expenses. It will also make your home more comfortable, thus increasing the chances you’ll stay in it longer and also increasing its value when you do sell.
Longer term, we need more people in the trades. Most companies I know of are making concerted efforts both to get young people interested in the trades and to expand the pool of potential hires. Jobsites are still overwhelmingly filled with white, straight men, but more and more women, people of color, and trans and queer folk are finding their way into the trades. Hopefully, they are finding welcoming companies to work for. And contractors are also increasingly getting involved with high school- and college-level training programs.
Housing is presumably going to look a lot different in a decade or two. Costs, financing, an aging population, different family types and sizes, and the increasing impact of global warming are all going to continue shaping things. A more thoughtful approach on all levels is more important than ever.
This article appeared in the Spring 2023 edition of Green & Healthy Maine HOMES. Subscribe today!
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