Lumber price inflation helps drives up California North Coast construction costs
Building material costs, with lumber alone up by 180%, may not drop to pre-pandemic levels soon, even when mills return to full staffing and overseas factories fully recover, according to some suppliers and contractors.
“This price spike has caused the price of an average new single-family home to increase by more than $24,000 since April 17, 2020,” stated the National Association of Home Builders, which reported lumber spiking 180% since the spring 2020.
At Healdsburg Lumber Company, half-inch plywood off the shelf sold for $19.93 a sheet on Feb. 4, 2020, while on April 1, 2021, the price was more than triple at $60 a sheet.
“Six months ago I would have told you it will come down at any moment. Now people say there is no end in sight,” said Ryan Arata, general manager for the Sonoma County lumber yard. “You can’t just fix the supply overnight. If tomorrow COVID ended and everyone was back working 24/7, they would still only have X number of plywood plants in the U.S. and you can only work so fast. So, it’s going to take months or years to build up stock.”
Rick Wells, CEO of Marin Builders Association, said these prices may be here to stay for a while.
“They may swing and drop in small amounts, but don’t expect to see a return to pre-COVID prices. What we are going to see is a new floor,” Wells said.
The association has 565 members all over the North Bay, but primarily in Marin County; representing every kind of contractor as well as folks who do business with contractors.
Impacts of the pandemic
Those in the construction-building-design business who spoke to the North Bay Business Journal mostly point to the pandemic for the reason why the prices have skyrocketed and why the supply of goods is out of whack.
When the country and world started to shut down in March 2020 so did lumber mills, as did factories making appliances, and other related sectors. Like many industries, when work resumed, protocols were in place to keep employees safely distanced. A full complement of workers did not return. This meant the production lines were putting out less than they did before the pandemic.
Healdsburg Lumber said vendors used to deliver product in two days with 98% of the order. Now it takes four weeks, with a fill rate of 60%.
The coronavirus pandemic disrupted shipping times, too, with some of the material coming from overseas.
“We order garage doors when we start the foundation and they generally don't go in until after the dry wall,” said Keith Christopherson with Christopherson Properties in Santa Rosa.
Today, it’s necessary to provide at least a 12-week lead time for ordering those same doors. A year ago it was not a problem to get them in three weeks.
Christopherson uses KitchenAid appliances, which are made in the United States. Even without an ocean liner needed for shipping, delays and price increases are the norm.
“I think the issue is with the labor force,” Christopherson said. “People are getting unemployment checks so they are not coming back to work. It’s really pushed the cost of building way up. It’s making it difficult to build houses at reasonable prices. The market has never seen anything quite like it.”
Whirlpool Corp., which makes Whirlpool, KitchenAid, Amana, Maytag, JennAir and other brands of appliances, has 15,000 employees at its nine plants in the United States.
“Our plants have experienced a few brief interruptions in production related to the pandemic, including component shortages, but as a whole have remained up and running throughout this challenging time,” spokesman Chad Parks said. “Implementing steps to make our plants COVID-safe can impact manufacturing lines and production rates. These adjustments, including social distancing, have impacted most manufacturers across many industries, including many of our suppliers and other appliance manufacturers.”
Victoria Reschke, category business manager with Napa-based Central Valley Lumber, believes the pandemic is the reason for the market being off kilter. With people’s work spaces now in their home, along with kids still going to school virtually, renovations are the norm as is moving because many people can work from anywhere.
“People want to move to the suburbs where they have land and more space in their home,” she said. “People want an office, a kids’ room where they don’t just sleep. In California I think that demand is here to stay.”
All those remodels and building of larger homes would stress a normal supply chain, but these are abnormal times.
“We have had trouble with refrigerators. It’s much, much worse because what happened when COVID struck is people bought a second refrigerator for the garage so that wiped out the refrigerator supply,” Linda Nave with Sandra Bird Designs Inc. in Kentfield said. “In addition, the supply chain was broken because of shipping, then factories closed down until they could operate COVID-friendly. Some refrigerators are delayed six months.”