By Ryan Siebert
When I think of trends in Residential Construction, home remodeling and home building, I don’t think in terms of design and colors. My mind goes to the type of projects and the hurdles that are present that impact the way that the business is completed. What changes have taken place in my life as a home builder in Naperville over the past few months? This article will explain the trends that I see present in home building and remodeling, with a focus on the Chicago area.
Massive Spikes in Demand, Or Maybe Just Curiosity
In my world, numbers do not lie. So when I look at the last two months of leads activity you can tell that something has changed. What may be the culprit is there are a lot of bored people sitting at home with time to think about remodeling projects. I am of the opinion that there has been a higher amount of “Curious George” syndrome than normal. To some of my clients’ defense, they flat out admit they are not looking to open their check book yet.
What are the types of projects leading the trends in residential construction?
- Handyman Work – Early in our shift into the custom building and remodeling industry we took an “anything we can get” approach. This works, because we have the capacity to handle small and large projects, although they are not our preferred business model. That being said, we have literally priced out 6 projects for one block of homes ranging from $1,500.00 to $15,000.00 in work. The smaller projects are in high demand right now, and handymen that I work with are booked for months ahead.
- Master Bathroom, Kitchens, and Finished Basements – We love these projects. We are able to bring a ton of value to our clients with our subcontractor team, and they are large enough to make the project management worthwhile for everyone. These projects initially fell off of the proverbial face of the earth. No one wanted us in their home. Then we started getting the bored curious clients. Of the many estimates we have drawn up over the past 120 days, we can happily say that enough of them have decided to move forward. Much to our delight they will all be begging us to complete before Thanksgiving! Can you sense my sarcasm?
- New Construction and Home Additions – Wow, the number of people that want to build a new home or add an addition in the Naperville area is amazing. The unfortunate part of this type of lead has been the reality shock we have had to provide in the cost of building new or adding on. What we have is a lack of inventory of homes on the market. This is resulting in creative minds looking for options to build a custom home or add an addition to an existing home. For me this is resulting in a lot of hours working on estimates filtering through in hopes a few will move onto the next step.
Can The Industry Handle The Activity That Is Coming?
The more opportunities that we have, the more we will close. The question is will the trend of higher demand in residential construction result in more jobs completed? There are a few trends that worry me when it comes to the scalability of this industry.
- Supply issues – When the Covid-19 stay at work order was implemented I was concerned about the factories that produce high levels of material. Things like wood framing materials, windows, trim and doors would have a tough time if their production is shut down for long. Unfortunately, that fear is coming to life, see this article for more details. The prices of framing materials has increased significantly, causing owners to come up with $3,000.00 – $5,000.00 in the span of 3-4 months for a new construction home in the 3,000 square foot range. My lumber suppliers are telling me this trend does not appear to be going away soon. What about tiles that are made in Italy? Do you think we are having supply issues there as well? Covid has not gone away, yet the demand for projects appears to have spiked up. Local vendors, such as my cabinet supplier, have been hit with a back load of orders and have gone from 3-4 week timelines to 8-10 weeks. So we are dealing with higher prices, and longer lead times.
- Labor Issues – This is a continued issue within the construction industry as a whole. We have a lack of quality labor available. In my opinion the construction industry has seen 10 years go by with very few young laborers entering the industry. The financial crisis, and a rise in tech money has caused potential laborers to stay away from a construction career. So once again we have a lack of labor causing higher prices and longer lead times for projects.
- Supply and Demand Issues – The reality is the lack of inventory of available homes, resale or new, continues to raise demand on the construction industry. In theory there is an unlimited of supply of remodeling options. In reality the supply of quality contractors, and supply of materials is limited. Economics 101 teaches us that a rise in demand, with supply equal, means prices will increase. Those that can swallow the higher costs will find a way to make their project happen. Others will take the dive into the DIY world. Godspeed my DIY warriors!
Are you looking for more information about how these trends in the residential construction industry will impact a project you are looking to take one? If so, please call Ryan at 847-602-7641 or email Ryan@SGHomeBuilders.com.