HOW HAS COVID AFFECTED CUSTOM HOME BUILDING IN COLORADO? | AN ELK RIDGE CUSTOM HOMES GUIDE
So here we are with all restrictions lifted a while ago, Covid variants are still popping up, and most of us are back in full swing living in the “new normal.” Our housing market has recently hit the highest/fastest growth rate in history and is ever-so-slightly cooling off. The building industry has been riding a crazy wave of insane growth since Covid reared its ugly head in 2020 when many jobs became remote (so why not move out of California to Colorado). We have seen nation-wide labor and material shortages that have led to crazy price increases and unheard-of lead times for materials. There is still a seemingly endless line of cargo ships anchored offshore in our port cities waiting to unload the materials we desperately need to get caught up…
SO HOW IS HOME BUILDING GOING THESE DAYS?
That is the question we are going to answer below. Note: this is information based on our experience as custom home builders in Colorado Springs, Colorado as well as information we are getting from our friends who are builders, subcontractors, and materials vendors. We will be comparing the building industry from January 2020 to January 2022.
Let’s start by saying that, although we are living in a weird world that is far from the pre-Covid world, we are still seeing market-growth and we believe that we have an opportunity to build a better industry than before, rather than trying to recreate the glory days (like Uncle Rico). Like most “glory days” memories, we tend to reminisce about the good things and forget about the flaws in the system that needed to be corrected. Covid has forced some creative thinking that needed to happen to get us out of the rut that “always having excess” created. Therefore, we believe and see signs of good coming from this worldwide reset, though we have some hurdles to overcome in the meantime.
HOW MUCH HAVE BUILDING PRICES CHANGED?
The best picture we can paint for job-costing these days is of a roller coaster that is continuing to ascend as it has ups and downs. Lumber definitely made the news with insane increases last year but every material that goes into or onto a home has seen price increases well above the norm in the past 18 months. Percentage wise we are currently sitting about 30%+ higher across the board, than we were at the beginning of 2020. That means a $600K build would cost around $780K today… but fear not, the housing market has more than followed suit with home sales and appraised values. We have been building through these increases and finding creative ways to save anywhere we can for our clients, which helps them stay as close to on-budget as possible and gives them some pretty serious equity in the end. For example: we built a home through the worst of the lumber increases and completed that home at a $1.2M build cost and the appraisal just came back at $1.8M!
HOW HAVE MATERIALS SHORTAGES AFFECTED BUILDING?
The answer to this is threefold:
1. Because today’s lead times for materials are in constant flux, we’re having to daily update our system with new “when to order” target dates… it’s like shooting at a moving target! This is also messing with our sequences and completion times, though we have only added about a month to our build process at this point.
2. There are some items that we just can’t get anymore (or quick enough to make sense to wait for) and that list changes constantly. Our clients are having be flexible through this and understand that with a little extra work we will get them everything they want in their home.
3. There are a few items that have lead times that are impossible to contend with but that we need to build, like some appliances (in 2020 we could get any appliance in 4-6 weeks, today some are taking 12+ months). So, we are having to be creative since our average build time is 6-7 months and the math doesn’t work. We have had to install “loaner” appliances while waiting for the permanent ones in some of our builds.
WHAT IS THE CURRENT OUTLOOK ON THE BUILDING INDUSTRY IN COLORADO?
All signs are pointing to continued growth in the building industry in 2022 as Colorado Springs continues to be one of the fastest growing cities in the country. Most builders have a positive outlook, though the past 18 months have been a little rough. Subcontractors have had more business in the last 2 years than the previous 10 combined but have had to navigate labor shortages and turnover. Suppliers are numb as they have been delivering unwelcome news to everyone for a while now and they are sick of being yelled at (not by us). Overall, everyone we talk to is cautiously optimistic that we will see some of the pricing and availability of materials equalize throughout the year, though no-one sees things ever getting back to pre-Covid status. So we will continue to get creative and look for opportunities to build a better future!