SHORT SUPPLY

from 2021 BIA Parade of Homes Guide

REMOTE CONTROL

Homebuilders face challenges in a tight real estate market

BY GARTH BISHOP

Though the real estate market has intensified in the late stages of COVID-19, and shows signs of continuing to intensify, builders and homeowners alike are having to temper their expectations as they deal with material shortages.

There is certainly a litany of reasons for various material shortages, from reduced production capacity to increased interest in home improvement projects. But the effect is that builders are having to find creative solutions to problems they have limited ability to solve.

No material shortage has grabbed as many headlines as lumber. From general categories such as plywood and softwood to specific types, such as oriented strand board used in construction of walls, builders are finding themselves having to cope.

Production capacity has been a big part of the problem. As safety measures and social distancing were put in place to arrest the spread of COVID-19, it became more difficult and timeconsuming to produce lumber for home usage. On top of that, homeowners found themselves with a lot more free time, but nowhere to spend it outside of the home, fueling a surge in DIY and professional home improvement projects.

Even as lumber prices have started to fall in recent months, lumberyards have been reticent to restock, knowing they could lose money if they buy now and prices plummet down the road.

Besides raising prices, many remodelers and homebuilders have been looking at pre-ordering materials to reduce the effect of the shortage. Other possible solutions for builders include incorporating price escalation clauses or shared price clauses in contracts, working with suppliers to get price guarantees, and waiting longer to list spec projects.

For those builders who have considered switching materials, some of the options have included steel, concrete masonry and structural insulated panels.

As much as lumber has been the focus of many recent discussions on material shortfalls, it’s certainly not the only problem area.

Copper supplies have been running low as well, presenting challenges in the installation of wiring.

Steel has been presenting its own set of challenges. In addition to slowed production, tariffs on steel imports have made it harder to obtain. That’s been a problem for supplies such as flat steel form ties, which are often used in basements to tie together aluminum panels for walls.

Then there are appliances. The worldwide shortage of semiconductors has deprived appliance manufacturers of a crucial piece of technology, driving supply down for the first time in a

long time. It certainly doesn’t help that manufacturers had been easing up on production of appliances in early 2020, as demand was down – only to see it skyrocket when COVID-19 blew up.

Appliances have also been popular items for replacement during the pandemic, further reducing the number available. Appliances such as dishwashers make for relatively easy home improvements, and many appliances spent the pandemic getting a serious workout as people stayed home much more than usual.

Other items that have been reported in short supply include: • Windows and doors • Vinyl for window extrusion • Plumbing fixtures and fittings • HVAC equipment • Insulation • Trusses • Roofing materials