October 4, 2021
Clients & Partners,
This is the first of a regular update that we will be sending out as a company to address the rapidly changing residential construction environment that we find ourselves in. Our goal in this newsletter is to provide our clients with the latest information related to trends we are seeing in our industry, and what to expect related to that during the construction process.
Although the current high activity levels coupled with the unpredictable COVID impacts on suppliers and subcontractors present their challenges, we are taking important steps on a regular basis to tweak our process in order to mitigate these impacts on our builds.
- Activity is way up: ‘New home construction starts are up almost 20% from August 2020 to August 2021’
- COVID: Many suppliers and manufacturers have entire crews or warehouses shut down due to outbreaks making lead times unpredictable
- A lot of what we continue to learn is anecdotal, but these drivers have affected many other areas of residential construction
What we know now:
- It started with lumber: “Lumber prices skyrocketed to historic highs during the coronavirus pandemic, fueled by a demand for new homes and a surge in renovations and DIY hobbyist projects by those of us on lockdown”
- Fortunately, we are starting to see these prices normalize but some wood products are still driving price increases. Ex: Cedar used for fencing, garages, and siding
- We are not getting great information from suppliers because they do not have good information from manufacturers
- Lead times are extending beyond estimated delivery dates
- As an example, we ordered cabinet door hardware to be delivered in July, only to find out from our supplier that it was backordered until February – 6 months after the closing of the home
- Material prices are rising for almost every item, including copper (used in electrical wiring), sheetrock, garage doors, paint, insulation, roofing materials, concrete, steel, and more
- Subcontractors are stretched thin due to activity and often times take longer to complete work than years prior
What we don’t know:
- What other items will be affected going forward related to lead times and pricing
- What trade will show up understaffed causing delays in timing
What we are doing to mitigate:
- Ordering items much earlier: trusses, appliances, tile, lighting
- Selecting items that are not back ordered to the best of our knowledge
- Having finish products delivered on site sooner so that we can determine what is missing to replace it before it is time to move in
- Communicating with our subcontractors in advance of their work starting, and re-arranging our schedules to accommodate slower construction phases due to lack of available workers
- Communicating with our clients as soon as we see issues to make sure everyone is aware of what is happening
What we need from you:
- Trust that we are doing everything we can and managing this process on your behalf
- Understanding that we may have to do things temporarily to keep the house moving forward and this may incur additional costs. Ex: Storage containers, covering and uncovering finished products due to changing sequence of construction, or getting temporary fixtures until the real selection comes in
- Patience as some of the changes are our of our control
- Flexibility on move in dates while we work with subcontractors to finish work (of high quality) and with suppliers to receive all selections and get them installed
In summary, we don’t want to cause any anxiety related to the construction process; however, we may be reaching out to push some selections forward in the process to try to keep delays to a minimum. These are uncertain times, but we are confident in our team and our ability to keep the process organized and enjoyable for you and your family!
Aly will be following up with you as needed to inquire about adding a storage container at your property in order to receive materials well in advance of when they are needed.
Please reach out with any questions.