Q. Why are prices so high? I know we can blame it on the pandemic, but I wonder if prices are really going to come back down, or whether this is the new normal. We’re trying to decide whether to start our renovation, or maybe wait until fall. Is it supply and demand because so many are getting work done, or is there more to this? We just don’t know what to do.
A. Construction, in general, is a leading indicator of how the economy is doing, especially because so many other jobs and industries are bolstered by the demands of construction. Everything from construction materials, food, work clothing, tools, transportation and furnishings is tied to an upward trend in construction. But there’s often more to the story than just one aspect, and in the case of construction materials, that’s also the case.
Even though the pandemic created a slump in demand, since construction was ordered to a halt in the spring of 2020, when it slowly started up again, manufacturing was slower to respond because of a potential longer-lasting recession that was being anticipated. With the jobless rate extremely high and goods and services anticipated to be very slow to recover, many producers opted to reduce inventory, so there ended up being a lack of goods to ship when orders streamed in. That was the supply-and-demand part of the equation. Supply dropped, so the cost of what was available increased.
But there’s much more to the story, as there almost always is. I’m always amazed, as a student of history, by how much an individual can affect a large population. Personalities and their special knowledge, or lack thereof, can also have an effect. Just the utterance of derogatory statements, name-calling and undiplomatic bashing can have a subtle but far-reaching effect.
Adding tariffs, to “level the playing field,” is another possible reason for the soaring, tripling of costs for items such as lumber and cement. According to the National Association of Home Builders, the average cost of a new single-family home has increased by $24,000 since April 2020. In a reversal from less than a year ago, the Commerce Department has taken action to reduce the tariffs imposed on softwood lumber from 20 percent to 9 percent, and is addressing other construction materials that affect home prices. While it will take the summer to see prices adjust, there’s hope that the cost of lumber will come down again.
Many consumers were reluctant but determined to forge ahead with their planned projects. I haven’t seen anyone decide to wait. If you decide to hold out a little longer, take the time to make more specific decisions about things like door hardware, plumbing fixtures and types and styles of finishes. Give reasonable time to the permitting process and avoid, if possible, the stress that most customers impose on themselves. My best clients made files of items they selected, including colors and where to buy. Good luck!
© 2021 Monte Leeper. Readers are encouraged to send questions to email@example.com, with “Herald question” in the subject line, or to Herald Homes, 2 Endo Blvd., Garden City, NY 11530, Attn: Monte Leeper, architect.