The Bad News, The Good News
When it comes to the COVID-19 pandemic, it seems like it has been a lot of bad news – and within the construction industry there has been a healthy mix of bad and good. According to Dodge Analytics, the health of the construction industry dropped by over 25% between the first and second quarters of 2020, but by the third quarter rose slightly, suggesting that initial negative impacts of the virus had leveled. In 2020, we experienced a year of unprecedented disruptions.
In addition, workplace adjustments to COVID-19 on construction sites are further complicated by the fact that you often need teams of people working and coordinating closely on the jobsite. Separating employees as much as possible, forming smaller work crews, staggering shifts, and ensuring that everyone is wearing proper personal protective equipment (PPE) are all precautions that construction industry employers should be taking.
Currently, the nation still faces an historic and unprecedented lumber shortage. The shortage is the result of growing demand for bigger homes, new construction, and a surge of home renovations amid the pandemic. As a result of this perfect storm, lumber prices and other building materials have skyrocketed since the start of the pandemic, and have only just begun to fall. According to the National Association of Home Builders (NAHB), the average price of a newly constructed single-family home has increased by about $36,000 since April 2020.
The lumber shortage is just part of the litany of insufficiencies in today’s market. The price of all building materials are in constant fluctuation. Developers are tapping out their current supply of land much more quickly than anticipated, and build-ready land is not readily available. It typically takes a year or more to clear the obstacles required to turn raw land into a new home development, and large home builders are already behind current needs. As fewer build-ready lots become available, the demand for new home construction has been surprisingly increasing during this same time frame.
This shortage has contractors and builders struggling to find affordable materials. This challenge leaves suppliers susceptible to allegations that they may be using pandemic-related shortages to their advantage by unfairly raising prices. In the meantime, we are sure to see parties attempting to utilize termination, price escalation, and other contract terms to mitigate the impact. With many businesses suspending operations during the early months of the pandemic, construction companies and contractors have had to scramble to adjust, with many ultimately paying higher prices for materials.
How Classic Can Help
Classic Construction knows the importance of managing budgets for new construction, as well as restorations for HOAs and multifamily communities. Construction work across the board has become more expensive due to COVID-19, but we’re dedicated to making sure we’re doing all we can to ensure you get the best prices and the best quality work.
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