Tomball - Magnolia Edition | July 2021

DEVELOPMENT

2 0 2 1 R E A L E S T A T E E D I T I O N

Demand for homes stays steady despite increased costs, limitedmaterials BY CHANDLER FRANCE

EFFECTS OF COST FLUCTUATIONS According to a U.S. Chamber of Commerce report released June 17, 94% of contractors said their businesses have been moderately or highly aected by cost uctuations in building materials, an increase of 12 percentage points since the rst quarter of 2021 and 35 percentage points since the second quarter of 2020.

been through drywall shortages [and] lumber shortages, but I’ve never seen it like this.” Housing demand, prices Cox said the supply shortage and rise in costs of materials have led to an average cost increase of $30,000-$35,000 for the homes he constructs as well as a time delay of 60-85 days. Similarly, Sneller said it costs him 30% more to build the same house today he built a year ago. Even though these costs are passed on to the con- sumer, both Seller and Cox said it has not resulted in

According to a report released June 17 by the U.S. Chamber of Commerce, 94% of contractors reported cost uctuations in building materials moderately or highly aecting their business. Mike Dishberger, CEO of Sandcastle Homes and former president of the Greater Houston Builders Association, said price increases like these have happened in the past, but this year is dierent. “I’ve been doing this since the '80s, and the big dierence this time is the [materials] going up in price aren’t going up 5% or even 10%—they’re going up 25%-30%,” Dishberger said. Dishberger said the rise in costs is due to increased demand in building or

82%

94%

82% of contractors said costs signicantly aected them in Q1 2021. costs signicantly aected them in Q2 2021. MOST COMMON SHORTAGES 94% of contractors said According to the report, 84% of contractors are facing at least one material shortage. Wood or lumber, steel, and pipe or PVC were the top materials contractors reported having a shortage of in June.

less demand for homes. “I would have thought that we would see a slowdown because of how expensive it is, but I feel like we’re seeing the oppo- site,” Sneller said. “There’s even greater demand to just keep moving forward with projects.” In the last six months, Sneller said he has had one out of the 15 projects he is

WE’RE BATTLING COSTS ON EVERYTHING THAT GOES INTO A HOME. TOM COX, OWNER OF GRACEPOINT HOMES

remodeling homes during the pandemic, which led to a supply shortage. He also

said that because a lot of these materials are coming from overseas, the supply channels in the United States have not been able to keep up with shipping the materials.

33% of contractors are experiencing wood/lumber shortages.

33%

UP 11 PERCENTAGE POINTS

working on pause construction due to rising costs and limited supply. Sneller said the continued demand may be because homeowners are fearful costs are going to continue to rise, so they want to get their construction done now. Cox said even with increased costs, local homes appear to be aordable for people moving to Texas frommore expensive states such as California and New York. Despite being able to overcome the increases in costs for now, Cox said it is a “constant battle” on multiple fronts, including nding quality subcon- tractors and skilled workers. “We’re battling costs on everything that goes into a home,” Cox said. Danica Lloyd contributed to this report.

since Q1 2021

While lumber is of primary concern for contrac- tors, according to the chamber report, developers familiar with the Tomball and Magnolia area said they are experiencing shortages and cost increases for other materials as well. Matt Sneller, who owns Sneller Custom Homes and Remodeling and works in the Tomball area, said he has also seen copper prices rise threefold over the past six months. Tom Cox, owner of Gracepoint Homes, which is building in Magnolia Reserve o FM 149, said it took three weeks to receive an order of bricks in January. Now, he said the most common bricks he uses are taking 27-50 weeks to arrive. “In all 28 years [I’ve been building homes], I’ve never seen the cost run like this,” Cox said. “I’ve

29% of contractors are experiencing steel shortages.

29%

UP 15 PERCENTAGE POINTS since Q1 2021

12% of contractors are experiencing pipe/PVC shortages. UP 2 PERCENTAGE POINTS since Q1 2021

12%

SOURCE: U.S. CHAMBER OF COMMERCECOMMUNITY IMPACT NEWSPAPER

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