Interesting piece. Developers can afford to build homes for less money, so even if they charge less they are not necessarily making less. One benefit of lower labor costs. Side notes: Rising commodity prices could easily change this picture and there is some decontenting going on. http://www.ocregister.com/articles/percent-278588-costs-builders.html developers are benefitting from a little... [more]
Interesting piece. Developers can afford to build homes for less money, so even if they charge less they are not necessarily making less. One benefit of lower labor costs. Side notes: Rising commodity prices could easily change this picture and there is some decontenting going on.
http://www.ocregister.com/articles/percent-278588-costs-builders.html
developers are benefitting from a little reported side-effect to the housing slump: It's cheaper now to build a home.
Builders say construction costs are down 15 to 25 percent.
That translates into an average cost of $100,000 to $140,000 for just the "sticks and bricks" (without land) for a modest, 2,000-square-foot house.
That same house cost $140,000 to $190,000 to build during the peak of the housing boom just four years ago.
The savings could benefit consumers as well when passed on through lower prices, some industry officials say.
But the news isn't so good if you happen to be a subcontractor or a rank-in-file construction worker.
Thanks to cutthroat competition, these cuts are coming out of their hides.
Price drops for materials like lumber and drywall have helped some, but not much, industry officials say. And there have been reports that drywall costs could rise as much as 25 percent in coming months.
Costs for nails have doubled thanks to rising steel prices.
Ganahl Lumber's purchasing Vice President Pete Meichtry says that overall material costs are down – at best – 5 to 10 percent.
Builders got more benefits by designing smaller, more economical homes, he said.
For example, builders may use 2.5-inch or 3.5-inch baseboard molding instead of four-inch strips. Or they build a straight-forward ridge instead of a more elaborate – and more costly – hip roof. Windows have shrunk by about 10 percent. These changes are subtle, but add up to big savings.
"It's a combination of things," Meichtry said. "The customer's going to get a little less than he was a few years ago, but is not going to notice it."
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