Builders’ woes rising | Crain’s Cleveland Business

The growth of choices of textures, colors and types of materials for homes the past 20 years complicate the substitution process.

Mike Kandra, president of Edgewood Homes of North Royalton, said in a phone interview, “Houses are not easy anymore. Everything is intricate. Everything is difficult. There are so many items that homeowners may want that companies have trouble making enough to fill an SKU (Stock Keeping Unit) with it.”

He recalled that in the past, interior doors were largely similar. Now, there are raised, recessed and six-panel varieties.

Many builders say the situation for them is just like that of consumers, who wait months to get new appliances or furniture. However, builders deal with hundreds of items in a house and that gets multiplied by how many homes they are building.

Gary Naim, president of Petros Homes of Broadview Heights, said homes constructed by builders essentially are factories on different, individual sites.

“The consumer does not see the conveyor belt behind a home,” Naim said. “Shipping and supply problems make you lose control. All that stuff you planned to get there at a certain time is not there. Each week, it is something new. Things that were always available are not. It’s drywall, sheeting and electrical panel boxes on allocation. We live in a free society. We expect things to be available. They just won’t be.”

Typically, cabinet orders are specific for individual homes, especially given growing home customization in much of the industry.

“Two or three weeks used to be our cushion,” Naim said. “Last year, we had 18 homes with cabinets selected, (and) we were told a 10-week lead time. It was 26 weeks. You work around it, but it’s very frustrating for us and the consumer.”

Builders say getting a garage door may take 11 months. Windows that used to take six weeks to get now require 16 to 20 weeks. Certain fiberglass units, including bathtubs, take eight months. The list goes on and on.

Labor is in such short supply that builders sometimes wait weeks for crews to show. Kandra said he worried about getting supplies once last year as various delays piled up for a house, but various subcontractors were so delayed the timing all worked out.

The result: lead times for building homes are growing.

Bo Knez, president of Knez Builders of Concord Township, said the national average is for homes to take two months longer than usual to complete.

“When dealing with clients, the delay in finishing properties messes things up for us and them,” Knez said. “It delays when homeowners can get the house, so it’s a burden.”

Some delays exacerbate climbing costs.

To cite a tiny example, a delay in shipping of wall ties used in poured-wall concrete basements — a metal piece 8 inches long, in a variety of widths — has pushed them to 90 cents apiece from 7.

But the largest single factor in constructing homes is lumber and related materials, such as trusses. Lumber is slightly below its record price last year.

But builders expect prices to rise as spring brings the busy building season.

All those, along with rising land prices, add to the cost of the final home.

The rise in existing-home prices from last year’s hot market lowered the gap for some move-up buyers to get into new homes, but the question is how long before costs neutralize that advantage.

The concerns sometimes outweigh the saving grace of the current market.

Plenty of prospective buyers, energized by the prospect of rising interest rates, allowed some builders to build and sell more homes last year than in the pandemic’s first year, but overall production in the region is still ebbing.

Myers said he believes home production in Northeast Ohio is thousands of homes below potential demand.

“These costs affect people, how they live and what they are able to do,” he said. “These are places where people are raising their families; I take that very seriously. Shortages and longer lead times are management headaches for builders. The public’s shouldering those higher costs.”