Anyone looking to build or remodel these days may need to crunch numbers and plan ahead in ordering supplies.
Since the COVID-19 pandemic, builders are experiencing longer wait times for certain materials and higher or fluctuating costs on supplies.
However, the Minot area’s construction industry is revving right along, according to local builders.
“People have changed their minds about some projects but there’s still a lot of building going on, a lot of remodeling going on. I kind of feel it’s these record low interest rates spurring a lot of building, even though commodity prices are high,” said Pat Bailey, owner/manager at Muus Lumber & Hardware, Minot. “New construction is strong. Remodeling is strong.”
Among the hiccups that are keeping the activity from climbing even higher is the lead time to get building materials and the cost of those materials. As an example, Bailey cited a window company whose lead time to deliver product went from four or five weeks to 18 weeks.
Bailey said builders need to plan six to 12 months ahead rather than the typical three months out to ensure products are available when needed.
Bailey said the supply chain has had trouble keeping up for various reasons. Plastic items became harder to come by after the freeze last winter in Texas impacted the supply chain.
Some companies also may still be playing catch up after falling behind because of closures and cutbacks during the pandemic in 2020. Other companies find themselves with a diminished workforce and can’t keep up with the demand.
Bailey said some of the demand comes from people who postponed projects last year, thinking this year would be better. Then as lumber prices spiked this summer, demand fell. The resulting drop in price futures prompted people to jump back in, triggering price increases again.
“It was kind of a false sense of hope that the lumber markets were stabilizing,” Bailey said.
Depending on the category of product, price increases might be as high as 300% to 400%.
Local builders estimate the cost of an average house, about 1,500 to 1,700 square feet, is up $30,000 to $70,000.
“In normal years, we would be notified of a price increase maybe once a year. Now price increases are coming once a month,” Bailey said. “Right now the hot one is anything steel related.”
By managing customers’ expectations and planning ahead, Minot Lumber & Hardware has kept its construction season going smoothly, said manager Brenda Berntson. Ordering earlier, especially windows, which are eight to 13 weeks to delivery, has helped overcome the logistical issues with supply, she said.
Nor has Minot Lumber seen higher prices slow activity. Other than one customer who postponed a project until fall, construction has been uninterrupted, Berntson said.
“There’s a lot of construction that’s going on at this point in time,” she said.
“Last year, the COVID year, was probably our absolute worst year we’ve ever had, and I would say this year is probably one of the top five years we’ve ever had as far as busy and the number of homes that we’re building,” said Stacey Abel, whose Ready Builders has been in business in Minot since 1998.
“Obviously, things are just skyrocketing and you can’t get product. But the thing that’s keeping things going is the interest rate. People want that 2-¢% interest,” he said. “Over a 30-year note, it’s still doable with the interest so low.”
The biggest change for Ready Builders is in no longer being able to guarantee a move-in date for homeowners because of the delays in getting supplies. Ordering as much as possible at the start of the project has become standard to lock in prices and avoid uncertain price increases, Abel said. His sheet metal supply has probably gone up 15% five times since the first of the year, he said.
It’s not just steel, which is in so many products, but all aspects of construction have seen increases, Abel said.
“It just all adds up,” he said. “It might take a little while for prices to really come down. I don’t see that happening drastically or really quick. I don’t think it’ll ever come back down to the prices that were before COVID.”
John Dufner, owner of Dufner Construction in Minot, said price spikes already are easing. However, even as lumber prices go down, prices of other materials could remain high into year, he said. He estimated the cost of various construction materials are all up at least 15%.
For people who want custom homes, which is Dufner’s market, the lead time required in ordering supplies hampers the ability to make adjustments throughout the building process without pushing back construction completion by weeks or months. It has forced people to settle on cabinets or design elements at the start rather than seeing how things come together during construction.
“That’s really unfortunate because that takes away from the beauty of a custom home,” Dufner said.
Dufner expects supply to catch up over the winter when seasonal demand declines. He also looks for construction activity to remain solid next year.
Minot is showing strong building permit numbers so far this year. Through July, the City of Minot had issued $220.27 million in building permits, already up from last year’s total of $49.35 million and $35.35 million in 2019. Numbers are impacted by significant commercial construction and remodeling, including Trinity’s new hospital complex and the Magic City Discovery.
Minot has issued 58 permits for single-family residences and 36 permits for residential remodels and additions this year through July. During 2020, there were 85 permits for single-family homes and 65 residential remodel or additions.
Ward County has issued 9 single-family residence permits and one addition/remodel permit through July in the areas for which it handles permitting. Some townships and most cities issue their own permits within their jurisdictions, including any extra-territorial zones.