SKYROCKETING MATERIALS COSTS CREATING HAVOC FOR NEW CONSTRUCTION It’s an odd time for multifamily construction. True, it’s been an odd time for almost all industries over the last year and a half, but new multifamily and residential construction has been particularly eye-catching of late. Sure, the rise in construction permits, stalled projects being resumed, and overall growth of multifamily construction are amazing signs of a strong industry comeback, but at the same time, construction costs across the board have been choking and somewhat stunting that growth.
Let’s look at some of the factors that have been affecting the ailing construction industry. For a time leading up to the pandemic, construction costs had been on a steady incline, arguably already well within the “expensive” range. The pandemic and subsequent response only served as fuel to that rising fire, causing what was once a simple industry gripe into a national point of concern. As the cost of building new inventory continues to rise, more developers are coming forward with reports that show the negative impacts on their business as a direct result of the increased costs. The prices have led to many developers being unsure of everything from construction completion timelines
to overall project feasibility, with many projects dead in the water before they ever started. Frustratingly, this is all occurring in the midst of a period of incredible demand for new housing. These heavily inflated costs are truly an issue of concern. The United States Bureau of Labor Statistics has published data showing that the price of construction materials has shot up by a whopping 34.1% from this same time last year. For reference, the previous year-over- year growth record was 21.4%, and that was for the year 1974 when consumer prices were already on a steady rise of around 10% annually. Now critically important building materials are showing significantly higher prices than those from only a year ago as
THE PRICE OF CONSTRUCTIONS MATERIALS HAS SHOT UP BY A WHOPPING 34.1%
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