Victoria building supply costs level, help to stabilize home construction market?

Gabe Semenza

June 25, 2010 at 1:25 a.m.

If you've wavered about whether to build a new home, now might be a good time - at least by one standard.

Costs for many Victoria building supplies fell to near-normal levels during recent weeks. Thus, the cost to build a home now is about as much as it would have cost one year ago.

The news might be good for Victoria's residential construction market, which appears to have rebounded slowly from the beating it took last year.

Local builders, who monitor construction supply costs, say they watched prices climb for about a year. Now, the costs for many supplies appear to trend downward.

"We're definitely stabilizing overall," said Tony Prokop, a Victoria builder. "I'm seeing materials at a good price right now, a stable price."

Stable local prices come at a good time, considering national homebuilding statistics. U.S. home construction during May failed considerably to meet expectations.

Residential construction from January to May in Victoria, however, jumped from 12 new homes in 2009 to 29 this year.

"Last year was awful - worst year I had in 37 years," said David Hurst, a Victoria builder. "No one was prepared for it. Last year, I built six houses. This year, I've already built eight."

Building supply costs - many of which are linked to sporadic petroleum costs - climb and dive each year. Prices spiked in recent months because of flooding along the U.S. East Coast.

Examples of common, yearly price spikes:

Dry wall prices increase every year when producers shut down plants to clean machinery.

When a natural disaster hits, mills sell vast quantities of lumber and plywood to affected areas. They then inflate prices to slow buying. By doing so, workers buy time to resupply mills with lumber.

When it's cold, prices increase because fewer people build homes; warm weather encourages building and helps to push prices down.

Call this all a legal form of price gouging. The reality, though, worries some builders, given hurricane season is upon us.

"If you see a hurricane out in the Gulf, you will also see all building supplies jump 10 to 15 percent - boom," Hurst said. "If a hurricane hits, builders will have to increase our prices. We haven't had a hurricane in two years, so I'm afraid our time is running out."

Meteorologists predict a busier-than-normal hurricane season this year. This suggests building supply prices could increase at some point during the next six months - even if a storm fails to touch the Crossroads.

For this reason, some builders suggest that if you want to build, now is a good time.

Julian Solis, president of the Builders Association of Victoria, offers this advice: "If I was going to build, I would look at my building costs. Call a lumber yard and ask about costs, whether prices are coming down or going up."



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