The Construction Industry - Feast and Famine

We have all heard building is booming. Interest rates have been at historic lows. End users and investors are taking advantage of this environment.

In Okaloosa County, we can see the residential and commercial construction taking place. Remodeling and re-roofing are also a large part of the construction activity.

The construction industry is a vital component of economic development. Obviously it creates construction jobs. It creates homes and businesses for people to live and work. But it also drives the demand for products and materials and the jobs associated with these products.  Whether it’s a company selling concrete, lumber, shingles or flooring, these jobs are sustained by ongoing demand.

You would think everything is great. Demand is high and building is booming – the feast. It’s been said realtors have been making money hand over fist. However, we have famine at the same time. There is not enough housing inventory to satisfy demand and the cost of housing is going up. Why?

The cost of goods is going up. The cost to transport the goods is going up. This results in the price of a house going up. In fact, I talked to a builder representative recently who explained to me the prices of their new homes are continually going up. Their profit margin is the same. Potential buyers who come to look at the model home and come back later are upset because the price went up since their last visit. The rising prices of homes is causing families to reconsider buying. They can’t afford it anymore.

Not only are the prices going up, but it is taking a lot longer to remodel and build. Why? Because builders can’t get materials and product in a timely manner. The same builder representative I spoke to said dishwashers were on backorder three months. They use the same dishwasher to move around completed homes in order to pass inspections. They had to drive to Texas to get the paint they needed. A neighbor of mine said their remodeling project took months longer than they expected due to products not being available. Repairs are also affected by the supply chain problems.

The builders and their employees are affected. The homeowners and business owners are affected. The lumber, concrete, flooring and appliance companies and salesmen are affected. Like the proverbial ripples in the water, many people and jobs are impacted negatively.  And, we still have the problem of jobs available and not enough workers.

Feast AND famine.