DEVELOPMENT
Amanit Singh enjoys his family ’ s new home in one of Sacramento ’ s latest developments , Northlake . But there have been some issues .
The Singhs were living near Yuba City before paying roughly $ 850,000 to purchase a 3,500-square-foot house . It was built by Lennar , which is constructing more than 1,000 homes along Highway 99 in North Natomas and providing housing to a region lacking supply since the Great Recession .
The family got their keys the first week of January after their garage door arrived . “ We would have gotten the house like a month earlier if the garage door came in on time ,” says Singh , a 22-year-old Chico State student whose family immigrated from Punjab , India in 2008 .
The garage door the family has now isn ’ t what they ordered , but it beats the plywood covering other garages in the development on a bright February afternoon . The Singhs also moved in without a new refrigerator , stove or hood vent and had been making do with a loaner stove .
It ’ s just one small example of major supply chain issues that have been roiling the construction industry for more than a year .
With a hot market , soaring prices and new houses in such demand they ’ re sometimes sold via lottery , it ’ s a great time to be a builder in California . But it ’ s also uniquely challenging , with supply chain issues making it anyone ’ s guess when critical home goods will arrive and when the current situation will end .
‘ Like a five-headed dragon ’
Supply chain issues are affecting the construction industry from the moment bids are being written for development infrastructure to when components like windows , flooring and appliances are going into homes .
Scott Wolfenberger is a waterworks area manager for Sacramento-based Myers & Sons Construction , with his division providing infrastructure to water and wastewater treatment plants primarily in the public sector . Generators that used to take four to six months to arrive are now taking closer to a year . Both PVC and lumber prices have escalated massively , with the volatility making it tough for Wolfenberger to bid jobs .
“ It ’ s definitely decreasing our margin , our profitability ,” Wolfenberger says . “ We haven ’ t had anything that ’ s extended into a loss because of something like this . But … this is like a five-headed dragon .”
“ Over the past six months , at one point we must have had 250 homes just in Northern California that were framed , waiting for windows , and they sat for two months without windows , totally disrupting the whole close of escrow dates .”
KURTIS RYDER owner , Ultra Glass
The COVID-19 pandemic is perhaps easiest to blame . But a conflux of factors appear to be throttling the construction industry ’ s supply chain .
After years of low inflation , the California construction cost index monitored by the state ’ s Department of General Services spiked to 13.4 percent in 2021 , after ranging between 1.3 percent and 4.4 percent annually from 2016 to 2020 . The average cost of materials to build homes is up 21 percent year-over-year according to Dan Dunmoyer , president and CEO of the California Building Industry Association .
Price increases seem to be prevalent across the board . The Associated General Contractors of America noted from September 2020 to September 2021 , producer price index numbers showed steel mill products increased 134 percent , while copper was up 39.5 percent , aluminum mill shapes were up 35.1 percent and plastic construction products were up 29.5 percent .
But lumber and plywood was down 12.3 percent , incidentally , though wood prices have fluctuated during the pandemic .
Whether to guard against paying a higher price months from now or to be sure goods are on hand when they ’ re needed , people across the industry are stockpiling . Dunmoyer sees it with builders . “ They ’ ll walk into a Lowe ’ s and say , ‘ Give me all your ovens .’ And they buy them and put them in warehouses .”
Meanwhile in El Dorado Hills , Tom Howard , vice president of construction for Parker Development Company , which developed Serrano community , was looking to order six power transformers at $ 15,000 to $ 18,000 apiece in the ensuing six to eight weeks after hearing from a contact at PG & E that orders could be a year to a year and a half out . “ We ’ re looking at , as soon as our plans are approved , going out and buying these transformers ,” says Howard , who ’ ll need them in early 2023 for new custom lots .
Christopher Ochoa , senior counsel for codes , regulatory and legislative affairs for the CBIA , says PG & E only approves two manufacturers for transformers even though a half dozen companies around the U . S . could be used . His group is working with PG & E to resolve the issue .
There ’ s also been a delay for windows , with Jim Scarr , owner and
54 comstocksmag . com | April 2022