PLYWOOD IS THE REAL ELEPHANT IN THE ROOM, SHOWING A YEAR- OVER-YEAR PRICE INCREASE OF A STAGGERING 144%
Lenders and developers have had to adjust to the current market conditions in order to stay ahead of the game, but the adjustments aren’t likely to stick once things stabilize further. Developers are bidding a lot more carefully and with a whole lot more scrutiny than before since the wrong shortage at the wrong time could upend a whole project and wreak havoc on a dev’s overall budget. As for lenders, they’re placing a lot more importance on the financial strength of the borrower in order to compensate for possible budget overruns on construction budgets. No transaction would be worthwhile for a lender if an unplanned 10% cost increase caused the whole project to go belly up. Regardless, it looks like we still have a long way to go before the labor force can fully recover. The construction job openings are growing, waiting for workers, but unlike that famous line from the movie “Field of Dreams”, they aren’t coming, so it can’t get built. That still hasn’t stopped analysts from predicting that housing starts will exceed their 2019 totals by no less than 20% on an annual basis through the year 2023. Let’s all hope there are enough workers to turn those starts into completions by then.
MATTHEW SLOLEY Head of Content Janover Ventures matt@janover.ventures
Matthew Sloley is a former mortgage broker who transitioned to creating informative and educational content geared towards small business, multifamily, and commercial investors.
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