How are you dealing with increased costs to build?

[Mayer M.]

Hey!

So how is everyone handling the increased development costs, particularly the dramatic increase in lumber prices?

I have started to see people put projects on hold hoping that material costs come down, but will they? And if so, will it be enough to make a dent?

Personally, I believe lumber costs will continue to rise especially once inflation begins to set in.

I am slated to begin a new construction multi family project and the lumber costs are about $200k more than they would’ve been a year ago. The way I see it is since everything is already lined up and ready to go there’s no sense in pausing with the hope I can build for cheaper in a year.

What are your thoughts?

[Jay Hinrichs]

Originally posted by @Greg Dickerson:

Originally posted by @Mayer M.:

Hey!

So how is everyone handling the increased development costs, particularly the dramatic increase in lumber prices?

I have started to see people put projects on hold hoping that material costs come down, but will they? And if so, will it be enough to make a dent?

Personally, I believe lumber costs will continue to rise especially once inflation begins to set in.

I am slated to begin a new construction multi family project and the lumber costs are about $200k more than they would’ve been a year ago. The way I see it is since everything is already lined up and ready to go there’s no sense in pausing with the hope I can build for cheaper in a year.

What are your thoughts?

Lumber prices will come down when demand eases as interest rates rise. Many builders and developers are tabling projects due to cost. The decision to move forward is all about the numbers. Rates are still low so it may be a wash compared to lower prices when rates were higher. If you are in a position to wait that may be the best bet for you. If the deal still works then go for it.

I had a sit down with our appliance provider ( ferguson) last week.. refrigeration is very tough we can no longer order ANY as a builder.. he said the big MF projects are scrambling he had a container of apartment refers go missing cant rent with no refer.. LOL.. also for high end Wolf sub zero is 6 to 9 months out right now.. so i have two high ends going on for me and one to sell and I have to order my wolf and sub zero now.. or go shopping on craigslist :) seems like in our little world of SFR so far the pass through has worked but when you have a project of 250 units new build started 3 years ago at one budget number and the lumber was going to be X and its now triple of X but the rents have not gone up or in some A class at least on the East side of PDX it has gone down.. proforma's are going to suffer.