Request for new homes in the Traverse City area: “This is crazy”

TRAVERSE CITY, Mich. (AP) – Prospective homeowners have a long, winding road to follow before they can relax on the couch in a new home in northwest Lower Michigan.

They have to rack up a lot of money, pick a building plot, select a contractor who can find enough skilled workers to put a house together, wait months or years for construction to begin, and then rethink their budget to accommodate the increase. materials and labor. fresh.

“Our biggest problem right now is that the material costs are just ridiculous,” said contractor Ryan McCoon of Endura Performance Homes. “It’s crazy what’s going on in the industry right now. And no one really has an answer for that.

Lumber is the star of recent price increases, according to the Traverse City Record-Eagle.

“250% increase in one year is incredible,” said McCoon. “The average is between 3 and 7% per year. “

Bob O’Hara, general manager of the Home Builders Association Grand Traverse Area, offers this advice to anyone considering building a house in the area: “Be patient and plan ahead.

“Most of them understand that they have to at least talk about next year,” O’Hara said. “They have been very patient. Part of the reasoning behind this could be the high costs right now. Costs are skyrocketing this year. Many people have had to recalculate their budgets for housing.

Some buyers are willing to wait to start construction as they hope lumber prices may come down after material shortages caused by coronaviruses disappear.

The overall costs of building homes are increasing for several reasons. Two of the most important are timber and labor.

“Lumber prices have tripled since July (2020),” said contractor Scott Norris of Scott Norris Construction. “But wood is only one piece of a house puzzle. There are other things that have not increased as much.

Yet the overall cost of a new home has skyrocketed during the COVID-19 pandemic.

“I guess housing over the last year has gone up by at least 20%, maybe more,” Norris said.

O’Hara doesn’t see a quick end to the trend of higher construction costs.

“The demand is there, the supply chain issues are still there, so I foresee that it will probably continue,” he said. “There have been some signs of weakening the surge, but no real reversal yet.”

High lumber prices and other factors also affected commercial construction.

“Some businesses are already booked, some until the end of summer, others until December,” said Kendra Balderach, executive director of the Builders Exchange of Northwest Michigan. “Some people aren’t even bidding on projects right now,” because they’re already very busy. “

The Builders Exchange is a non-profit organization that provides members with access to project documents for commercial and industrial projects, so they can decide which jobs they want to bid on. Some business entrepreneurs are available to work despite this year’s challenges, she said, but supply chain issues remain a factor.

“Commercially, the timing has changed due to the lack of supply and the price of timber,” Balderach said.

Demand for new housing continues unabated in Northwestern Lower Michigan.

“We’re relatively busy,” Norris said. “We have always been busy. I’ve been there for a long time, so we have an established clientele. Things are very busy, despite the exorbitant wood prices. It seems that there is still demand. “

McCoon agrees.

“This is insane,” he said of the demand for new housing. “We work on a first come, first served basis. We are constantly working with many clients, so whoever is ready first, whether it is design, licensing or financing work. Speaking to a lot of builder friends, they’re in the same boat. Everything is scheduled for next year.

Labor issues are contributing to the backlog.

“It’s hard to find skilled labor,” Norris said. “We could do more work if we had access to a more skilled workforce. “

It currently has 17 employees on its payroll, down slightly from pre-pandemic levels.

A few of its workers have lost work days over the past year because they were sick with COVID-19. Whenever one of Norris’ employees fell ill, they were absent for about two weeks on average.

But perhaps the biggest workforce problem is that skilled workers see opportunities in self-employment.

“We had a few people who decided to go it alone because there is so much work and they can make more money,” Norris said.

McCoon tells the same story.

“The people who left either went alone,” he said, “or they found more profitable work because there are tons of opportunities out there.”

“This side of the market is so busy, and there is such a demand for skilled people in the construction industry that they sort of set their own price. They can basically say, ‘This is what I need,’ and people pay for it, ‘McCoon said. “Employees leave to fend for themselves, to become self-employed or to start their own business. They can make more money than being employed by someone else.

McCoon only has five employees at the moment, down from seven previously. To adapt, he had to transfer part of the work of his employees to subcontractors.

It is impossible to say when labor issues will be resolved or when lumber prices may fall. The demand for new housing remains high, however.

“It’s unlike anything I’ve seen,” McCoon said. “People are always ready to build. It’s just that we don’t have enough people to build the number of houses needed for this area right now, period. Not enough people. “

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