{"id":1115,"date":"2021-06-07T11:50:28","date_gmt":"2021-06-07T11:50:28","guid":{"rendered":"https:\/\/www.yardimatrix.com\/blog\/?p=1115"},"modified":"2024-02-06T11:18:36","modified_gmt":"2024-02-06T11:18:36","slug":"construction-costs-continue-to-rise-in-2021","status":"publish","type":"post","link":"https:\/\/www.yardimatrix.com\/blog\/construction-costs-continue-to-rise-in-2021\/","title":{"rendered":"Construction Costs Continue to Rise in 2021"},"content":{"rendered":"\n

The dramatic rise in construction costs over the past year would seem to throw the shape of future development into question.<\/p>\n\n\n\n

Lumber and steel prices have increased by 90 percent and 58 percent respectively in the past year. While it looks like prices have begun to stabilize, construction costs are still significantly higher than they were a year ago.<\/p>\n\n\n\n

Rising materials costs are coincident with a shortage of labor and the rising costs that typically follow such shortages.<\/p>\n\n\n\n

But, while the situation might appear dire at first glance, development has not slowed down.<\/p>\n\n\n\n

\u201cThere have been a lot of deals that just don\u2019t pencil that I think will begin to pencil because there\u2019s an adjustment in the expected return,\u201d said Anna Goodrich, managing director of Development for Continental Realty Advisors.<\/p>\n\n\n\n

And the pipeline of future projects is full. \u201cArchitectural billings are going up, which is a good sign\u2026that means that projects are being designed and they\u2019re going to go out to bid eventually,\u201d said Robert Mewis, principal engineer for Gordian.<\/p>\n\n\n\n

Soaring materials costs are driving up prices<\/strong><\/h3>\n\n\n\n

Materials costs have been increasing, in part, due to production delays and logistics issues stemming from the pandemic shutdowns but also due to an unexpected spike in demand. In past recessions, demand for new single-family construction is reduced while the economy recovers.<\/p>\n\n\n\n

Things are different this time around with so many people working from home.<\/p>\n\n\n\n

\u201cPeople either got unhappy with their environments and decided they needed a new house, or they started do-it- yourself improvements,\u201d said Goodrich. \u201cSuddenly everybody and their brother decided they needed a new deck or a new kitchen.\u201d<\/p>\n\n\n\n

With lumber prices climbing so quickly, developers are looking at alternative construction methods. \u201cA number of people have moved into a structural system of light gauge steel,\u201d said Goodrich, noting that this may be a temporary solution. \u201cWhat that\u2019s done now is increase the demand for steel, as people move out of wood and into light gauge and creating the next issue, so now we\u2019re going to have expensive wood and expensive steel.\u201d<\/p>\n\n\n\n

Read the full article on CommercialSearch<\/a><\/strong><\/p>\n\n\n\n

<\/div>\n","protected":false},"excerpt":{"rendered":"

The dramatic rise in construction costs over the past year would seem to throw the shape of future development into question. Lumber and steel prices have increased by 90 percent and 58 percent respectively in the past year. While it looks like prices have begun to stabilize, construction costs are still significantly higher than they were […]<\/p>\n","protected":false},"author":650,"featured_media":1117,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[248,23],"tags":[],"class_list":["post-1115","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-commentary","category-studies-and-guides"],"yoast_head":"\nConstruction Costs Continue to Rise in 2021 - Yardi Matrix Blog<\/title>\n<meta name=\"description\" content=\"Residential building and home improvements have contributed to an unexpected spike in demand.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" 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