Rising Costs in New Home Construction

OLYMPUS DIGITAL CAMERAIn an article published earlier this month by the Denver Post, writer Aldo Svaldi hit the nail on the head by outlining the reasons residential homes are taking longer to build and are ultimately going to be more expensive for a variety of reasons.  New home buyers are already having to wait between 6-8 months to move into their finished home, and with rising interest rates, this can really affect their monthly payments.  While the waits times are just part of the process, the rise in new home prices are anything but easy to swallow.  You would think that rising new home prices are a result of builders jumping on the demand bandwagon and raising prices to get greedy – it’s just the opposite.  Rising costs in new home construction is rising simply to cover increasing builder expenses.

Lack of Available Lots – Prices of Lots Rising

Prices of lots are rising due to lack of supply.  In the Denver metro area and along the Northern Colorado coridoor, regional and local builders are seeing major and national homebuilders swallow up large tracts of land for development, leaving few lots for the ‘little guys’ to build on.  With high demand comes rising prices – across the board.

Lack of Specialty Tradesmen – Delays in Construction

One of the major reasons for longer wait times and rising costs in new home construction is the absence of qualified, specialty tradesmen like electricians, plumbers, framers, and drywallers.  After the recession, many major tradesmen left the business or retired.  Learning a trade requires several years of experience and there haven’t been enough young tradesmen to learn the practice and replace those who were forced out of business.  Of the remaining tradesmen, they are stretched thin, working on several jobs at the same time, and charging a premium for the work they do.

Lack of Available Workers

OLYMPUS DIGITAL CAMERAAkin to lacking specialty tradesmen, the availability of ‘grunt’ workers has fallen off substantially.  While foremen, managers, superintendents and schedulers are abundant, few laborers remain in the job market.  The recession warded off many of those possible workers, who may have opted to go to college and get a desk job or seek out another trade with more upside potential at the time – like working the oil fields.  The boom of oil and natural gas, with high initial salaries and low experience required,  has lured the majority of the construction crews away.  On top of that, a transforming immigration climate has put a strain on supply of available workers.

It’s tough to build homes in this climate with rising costs and shortage of labor.  If you’re a builder trying to gain an advantage and seek opportunities in this market, we invite you to contact us to maximize your results.  We can help you secure financing, scour the market for available lots, identify price points to base your models, and find the most qualified potential buyers for your homes.


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