From the grocery store to monthly utility bills, we’re all feeling the ripple effects of the supply chain crisis. It’s not just consumers who are being burdened. If you work in the property industry, you’ve no doubt noticed some changes. Here are some ways shortages could impact your job.
Delays in New Construction
The property industry is one of the major users of raw materials. Some of the materials that are experiencing the greatest delays include:
· PVC pipe
· Electrical components
While this would cause big delays for construction under normal circumstances, low housing inventory of historic proportion has only exacerbated this issue. There is a higher demand than ever before for new construction, but the materials needed to make them can’t come in fast enough. The prices of new homes were already up $36,000 in the spring due to the price of lumber alone! Because of the supply chain crisis, the housing shortage will continue, which means the cost of homes (and newly-constructed homes in particular) will likely persist.
Remodel and Renovation Delays
The supply chain material shortages are also creating issues for buyers who are looking into older homes rather than new constructions. There are some renovations that a homeowner may not want to deal with in a new home if they know the project is going to take much longer than usual. For example, roofing materials are hard to come by right now. This means that, if given the option, a buyer probably won’t want a home that needs a new roof since there’s no telling how long the replacement will take. While buyers may be willing to put up with delays on smaller remodels that are a matter of personal style, they will undoubtedly be deterred by houses that need more substantial construction, like the roofing example.
Less Residential Construction Spending
Of course, time isn’t the only barrier for buyers—money is time. Renovation projects that a buyer may have been able to afford last year may be out of their budget this year due to skyrocketing prices across the board. This could cause some buyers to pass on fixer-uppers. If you’re a contractor, you shouldn’t be surprised to see a decrease in residential construction spending.
Decrease in Nonresidential Construction Spending
As you’d expect, the supply chain shortage issues extend beyond residential properties. Nonresidential construction spending is also down. In August, the industry saw a 0.4% decrease in spending. This was down 3% from August 2021. If you’re a commercial contractor, you will probably begin to see this pinch very soon if you haven’t already.