Cost of building materials skyrockets
A joke is circulating among builders that a Ziploc bag of sawdust now costs $10.
But they aren’t laughing at the escalating cost of building materials that is threatening their livelihoods, pushing up home prices and making it harder for wildfire survivors to replace their houses.
"They're skyrocketing. It's out of control," Larry Scripter, owner of Scripter construction, said of rising prices.
His crew is building a new house in Phoenix to replace one burned by the Almeda fire, which destroyed nearly 2,500 houses, apartment buildings and manufactured and mobile homes in Jackson County in 2020.
Scripter said a piece of lumber that cost $2-$3 a few years ago is now going for $8. A sheet of wood that once cost $15 now costs $45 or more, he said.
The rising cost of materials makes it hard for projects to pencil out for Southern Oregon builders. They’re working harder than ever to meet demand, but often earning less.
“It’s going to kill the building industry,” Scripter said.
Many fire survivors are finding that their insurance payments aren’t enough to cover the costs of rebuilding.
“I know a few that are having to take out extra loans to finish the house," Scripter said.
The reconstruction boom in the wake of the Almeda fire in southern Jackson County and the South Obenchain fire in the northern part of the county is contributing to rising prices. But national and global forces are also at play.
Worldwide, the COVID-19 pandemic has slowed production of a broad range of products, including lumber, electrical wire, plumbing supplies, windows, heavy-duty trucks and excavators, according to people in the Southern Oregon building industry.
Trucking and shipping to carry supplies to factories and products to customers are both backlogged.
Supply can’t keep up with demand, pushing prices ever higher.
"I'll give you good rule of thumb. Right now this is what we're telling our builders and developers,“ said Builders Association Southern Oregon Executive Officer Brad Bennington. ”Take your cost of building materials that you were building with a year ago and triple it and you'll be pretty close. So if you had $100,000 of building materials in a house, budget $300,000."
The National Association of Home Builders reported lumber prices have risen 250% since April 2020. The price increase of lumber alone adds nearly $36,000 to the cost of a newly built home, the association said.
Although much of the world slowed down in 2020 due to the pandemic, home construction remained strong in the U.S. People built more housing units than during the construction boom that followed World War II, said Mel Weeks, manager of Parr Lumber in Medford.
“You lost a lot of production of building materials, but building was still going strong. Demand has outstripped supply,” Weeks said.
Many factory and mill workers are choosing to remain on unemployment rather than go back to work due to extra unemployment benefits, he said.
The American Rescue Plan Act passed by Congress adds a $300 weekly federal bonus on top of state unemployment benefits through Sept. 6.
“We need to get the workforce back to work,” Weeks said. “We need to encourage people to get off unemployment. We need to get people back out there building things and manufacturing things.”
He said low interest rates on mortgages and other types of loans are helping to fuel the construction boom.
Also, people who lost their jobs during the pandemic or started working from home decided to tackle home improvement projects, Weeks said.
“We saw a dramatic uptick in homeowner projects. People are working on their own place. Homeowners are depleting a lot of the inventory homebuilders would be using,” he said.
Weeks said supply shortages mean builders have to wait in line to get the materials they need. They used to order windows 10 days before installation, but now have to order two months ahead of time.
Weeks said he used to be able to call a mill to get a price quote and get a truckload of plywood two weeks later. Now mills are saying the plywood will arrive at the end of July or beginning of August.
Electrician Chris Guches is installing the electrical system in a house under construction in the Almeda fire zone in Phoenix. He is seeing price increases and shortages of a variety of electrical system materials.
A supplier recently limited a purchase of electrical wire to 750 feet, Guches said.
“That’s only enough for a quarter of a house,” he said. “The work is not slowing down. It’s doubling and tripling. The work is there ― the material is not. It’s a scary situation because if you run out of materials, you run out of work.”
He said people who are having their homes rebuilt often order some of the materials themselves, such as light fixtures that suit their personal tastes. Some lights and ceiling fans are backlogged three or four months. Electricians are coming back later to install the fixtures when they arrive.
Builders and homeowners are seeing shortages of certain models of home goods needed to complete a house, including ovens, mattresses and furniture.
"There's shortages. We've got supply chains broken all over the place. I had a developer tell me that he can't even get simple things like ovens and dishwashers right now," Bennington said.
Weeks said he fears the high prices could dampen construction at a time when Jackson County has never been in more desperate need of housing.
The area was already facing a housing shortage before the most destructive fires in Oregon history hit in 2020. Jackson County lost the majority of the more than 4,000 homes destroyed statewide.
“My fear is people will say, ’I can’t afford to rebuild,’ and they leave the valley. That further depletes the workforce,” Weeks said.