As I stated in an earlier posting, the Housing Bubble most of us fear isn’t what we should worry about right now because the Capacity Bubble is already here.
Finding ways to work through this other bubble has been so challenging that many offsite factories and even large commercial builders are scrambling every single day to meet the challenge of capacity shortages.
Construction projects are taking longer to complete and costing more to build than they did prior to the COVID-19 pandemic. The supply of available materials dried up considerably during the pandemic due to shutdowns and social distancing requirements, which reduced capacity at manufacturing plants. Those supplies continue to be constrained, and lead times for receiving materials are massively elongated.
For example, when placing orders for roofing insulation, builders can now expect a 180-day lead time versus just two weeks pre-pandemic, says Todd Sachse, CEO and founder of Detroit-based Sachse Construction.
Open web steel joists now have a lead time of 35 to 45 weeks when previously they were available in four to six weeks. Even getting standard paint has been an issue, according to Sachse.
The cost of lumber has come down to $399 per thousand board feet after spiking to an all-time high of $1,515 in May, according to Fortune. But there are still price hikes on shipping costs or items like glue, says Sachse. “These price hikes have cancelled projects, put some on hold and have placed a strain on subcontractors and trade partners who did not procure materials quickly and are not able to recoup the differences.”
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Gary Fleisher is Editor in Chief of Modular Home Source and Offsite Builder magazine. Email at [email protected]
