Paradigm Tax Group Industry News

Paradigm Tax Group Industry News

Stay informed with the most current Industry News that affects your business and impacts property taxes across the nation.

    Multifamily Developers Face Rising Construction Materials Prices, Labor Shortages

    4 Oct, 2018
     
    The threat of tariffs is putting pressure on prices of construction materials and driving up project costs for multifamily developers and contractors. Due to anticipation of tariffs on a long list of construction materials imported from foreign countries, many manufacturers are already hiking up prices. The price of lumber and steel products especially have been impacted by the trade disputes. Contractors also continue to struggle to hire construction workers for their projects. 

    According to the National Real Estate Investor, the producer price index for steel mill products jumped by 19 percent in August 2018 compared to the year before. The producer price indexes for lumber and plywood rose sharply this spring and early summer, though wood prices dropped back in July and August. In June, the indexes were up 18 percent compared to 12 months before (price increase had since shrunk to more normal levels). 

    In addition, the producer price index for diesel fuel leaped 34 percent over the 12 months that ended in August 2018. That’s the biggest increase for any construction material over the period, even though diesel fuel has not been specifically targeted with any tariffs. Contractors use diesel fuel to power off-road equipment, trucks and mobile cranes. They also pay for diesel fuel indirectly in the fuel surcharges on deliveries of materials and equipment. The producer price index for fabricated structural metal bar joists and rebar also climbed 16 percent over the 12 months that ended in August, and the producer price index for aluminum mill shapes increased 14 percent.

    The rate of unemployment is at record low levels among jobseekers with construction experience and the number of job openings is at record high levels in both construction and throughout the economy, according to the Bureau of Labor Statistics. A survey by the Associated General Contractors of America (AGC) asked about 20 specific crafts, and for all but one of those, more than half the respondents said that position was harder to fill than a year ago. Indeed, 80 percent of respondents said they were having trouble filling at least one type of hourly craft position. A wide range of positions were hard to fill, according to AGC’s survey. More than two-thirds of the firms that employ pipe-layers, sheet metal workers, carpenters or concrete workers reported more difficulty than a year ago in filling each of these positions.

    For the full article from the National Real Estate Investor, click here.

    Topics: Real Property, Multi Family, Construction, Industrial & Manufacturing

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