Doctor CamNC4Me wrote: ↑Sat Oct 02, 2021 8:19 pm
honorentheos wrote: ↑Sat Oct 02, 2021 6:53 pm
Anyway, back to yard work. Replacing a fence and digging holes kinda sucks. The price of society...
Excellent post again, Honor. How much more have you paid for materials, in your estimation, this year than, say, last year? I had a fence built by a local, and prices were in such flux he asked me to hold off for a month or so because he thought lumber prices would drop a bit. So I did and he was right. I actually saved ~ $1500.
- Doc
Right at the start of Covid quarantine I had Home Depot deliver some sheetrock and studs for a room renovation project I had thought I'd have time for given quarantine sounded like it would lead to slow downs with no where to go. I don't recall the unit prices for the materials but I don't recall any sticker shock. It was only just under $400 in materials anyway. Between the ramp up and extra coordination required transitioning everyone to work from home, the slow down didn't happen for me. Not only did we experience accelerated deadlines but we kept adding projects resulting in an intense period of months without a true day off. So the project didn't get started until winter with the materials taking up space in my garage, apparently appreciating in value though I was dumb and used them instead of selling them I guess. When I finally had time to begin I ended up needing to go pick up a few extra studs and some more sheetrock mud. The studs were over $7 each which blew me away. But the reality is my home projects aren't so imposing so I put things on the back burner through the spring and just got back to them. The concrete for the fence posts I just bought were about $4.50 / 50 lbs bag for the quick set post mix. High but not terrible.
My job involves design of sites such as parks, commercial site development, infrastructure projects, and the like. I interface with contractors, owners, municipal clients, and others in the business of getting things built more or less every day. When we develop our plans we also include our opinion-of-probable costs which we develop using estimating tools and recent bidding history. It also involves reaching out to contractor contacts to check on pricing. From sometime around 2016 to 2020, overall project costs were running around 15% higher annually. But concrete and steel were volatile. Concrete could spike from project to project depending on the availability of labor at the time. We saw one project in 2017 where the winning bid included standard concrete sidewalk at $22 per square foot. That''s more than double, Imagine walking down the street and taping $20 bills ever square foot...outrageous. That was caused by numerous factors from material availability internationally, local skilled labor shortages, and a few major construction projects going on at the time so almost every concrete crew had other work. The winning bidder's concrete sub gave it a price that he knew was ridiculous but figured if he won he'd figure it out.
One of the shortages that seems surprising to clients involves plant materials for landscapes. Everything is doubled in prices, unavailable, and undersized. 24-inch boxed trees are costing $600-$800 compared to $350-$400 two years ago and $200 just six years ago for example. And the tree itself was probably in a 15-gallon container days before it was sold.
This last spring my contractor contacts were forecasting 30% increases over a couple of months, and only holding prices for 30-45 days. Lead times for fabricated items like light poles or playground equipment? Over 16 weeks or more for items that used to have 7-8 week lead times. Light fixtures which were usually around 12 week lead are effectively "you'll get it when you get it". 16 weeks is on the low end.
So what does this rapid inflation look like on the ground from my experience? It's more than higher project costs. It's issues with contractors having to delay projects, constructed work having to be removed and replaced due to less skilled labor causing issues, value-engineered projects being less than they could have been because the budget was set in 2019 and there aren't pockets to be dipped into to make up the difference in many cases.
We all seem to acknowledge that some degree of inflation over time is beneficial. I read Physics Guys post and agree with the general content. I just view the downplaying of the "moderate" descriptor as missing something critical because we aren't experiencing moderate inflation right now. It's rapid inflation.
Now the Federal Reserve appears to believe the shortages are the primary cause and aren't going to move on interest rates to try and curb it. Chairman Powell said they believe it will taper off in early 2022 so any reaction to it would be premature and potentially backfire in cooling off the economy too much. He's possibly right, though it's economics so they'll certainly be better are positing explanations for why what did happen, happened. Nature of the game I guess.