We continue to feel the effects of the COVID-19 pandemic in new and different ways. Lately, the construction industry has been affected. The prices of construction materials have increased, and they are expected to continue climbing. This is frustrating both for customers and for companies in the construction industry. However, we have found understanding the cause of the price increases helps us make smarter and more informed choices.
With this in mind, let’s take a look at the factors contributing to the increased prices of construction materials. We’ll also discuss what we at Kelly Roofing are doing to address the situation.
Why Prices Are Rising
Basic economics teaches us when demand outpaces supply, prices go up. This is at the root of the recent price increases across the construction industry. Three primary factors are contributing to this economic shift.
1. Increased Housing Demand
When the COVID-19 pandemic arrived in the U.S., thousands of companies sent their employees home to work. Then, shutdowns and quarantines led people to spend even more time at home. As a result, society began placing greater value on space.
Before the pandemic, there was actually a trend towards smaller, more minimal homes. Once the pandemic arrived and people began doing everything at home, most wanted more space. People started shopping for single-family homes with more square footage. Builders began building to suit these demands, and in doing so, they purchased more building materials.
2. A Shortage of Housing
Since the 2008 recession, there has been less investment in homebuilding. This has slowly led to a shortage of housing. As the economy slowly recovered, more people moved out of shared living spaces and into individual homes. However, there weren’t enough single-family homes to go around. By some estimates, there’s now a shortage of about 9 million homes.
Homebuilders are working hard to build new homes to make up for this shortage. For example, D.R. Horton in Orlando (the largest homebuilder in the country), built 1,300 homes in 2020. They are slated to build 6,800 more in 2021. Builders in Texas and Florida are fighting to keep up as people move to these states from the north. This has all contributed to increased demand for construction materials, which of course, drives prices up.
3. Storage and Transportation Shortages
Amid increased demand, there have also been shortages of storage and transportation resources. The shutdowns due to the pandemic have contributed to shortages of vehicles and equipment.
Shortages of equipment make it difficult to produce enough of certain building materials. Shortages of vehicles make it difficult to transport the building materials and the raw supplies used to make them. At Kelly Roofing, for example, we ordered a new pickup truck in November. It was not ready for us until March.
There have been several other events which have made transportation a struggle, too. The blockage of the Suez Canal slowed down global transportation. Closed borders and increased border security mean shipping anything internationally takes longer. For example, most of the plywood sold in the United States is made in Canada. With much of Canada still in lockdown and the Canadian-U.S. border more restricted, plywood has been in short supply. The price of plywood alone has increased 378% since the beginning of 2021!
How Kelly Roofing Is Handling Price Increases
At Kelly Roofing, we’ve been monitoring price increases and have aimed to be as transparent as possible with our customers.
We are happy to say we have not been as negatively impacted by shortages and price increases as we could have been. Installing Tesla Solar Roofs is one of our major services. While the price of Tesla Solar Roofs has increased, the increase was singular. The price has not continued to climb, and the price increase we saw was not as dramatic as other materials.
This has actually made Tesla Solar Roofs an even better choice for our clients. The price difference between metal roofs and Tesla Solar Roofs has narrowed. If you’ve been thinking of installing a solar roof, this is a good time to do it.
Kelly Roofing has been putting our purchase orders in months in advance. This has helped us lock in lower prices. We are also keeping potentially scarce items in stock so our projects are not impacted by intermittent shortages. We’re limiting our bids to 14-day holds and are updating our pricing models every 2 weeks.
While we expect prices to continue increasing, we are doing our best to keep pricing as affordable as possible. Contact us if you’d like to learn more about Tesla Solar Roofs. We’re proud to be a Tesla Certified Installer in South Florida.