Replies to post #311007 on Tornado Alley (PROG)

[Tearex]

It's labor, not wood prices.
Even illegal alien demand a higher wage. Your homes cost more because wages are increasing to a more fair rate, instead of the cheap slave labor relied upon for so many years.

https://www.buildzoom.com/blog/whats-up-with-construction-costs

After falling or remaining flat for three decades, real construction costs have increased sharply since the mid-2000s. The rise was driven by both material and labor costs.
Construction costs are lowest in the South, and are highest in the expensive coastal cities and in remote locations like Honolulu and Anchorage. Material costs vary relatively little across cities, but labor costs differ substantially and account for the bulk of geographic variation in overall cost.
Over the last decade, the mix of construction work in some of the expensive coastal cities has shifted away from new construction and towards renovation, which tends to be more labor-intensive. Alongside faster overall wage growth, the shift has resulted in labor cost appreciation in these cities outpacing that of material costs. In contrast, labor and material cost growth in the South has been more balanced.
Rising labor costs can fuel a vicious cycle whereby costly construction dampens the supply of housing and exerts even greater upward pressure on labor costs (in several distinct ways).
The housing market appears to be reaching a cyclical peak, with falling home sales suggesting that already-slowed price appreciation may soon turn negative. Yet even now, residential construction still hasn’t recovered to its average historical levels. Rob Dietz, Chief Economist at the National Association of Home Builders, summarizes the headwinds confronting homebuilders as “the five L’s” of labor, lots, lending, lumber, and local regulations. Although lots and local regulations pose the most fundamental challenges to new residential construction, and as lending is finally sorting itself out (the way it tends to ironically at just the wrong time), this study is focused on direct construction costs, which comprise the two remaining L’s of labor and lumber.

To what extent have construction costs risen in recent years, and how do they compare to historical trends? How have material costs fared relative to labor costs, and how has this played out in different parts of the country? This study uses publicly available data as well as construction cost data published by R.S. Means and data from BuildZoom’s national building permit database to sketch out some answers.

The Long View
Construction costs have risen substantially since 2004, to the tune of 23.6 percent. Historically, real construction costs increased by 44.7 percent from 1950 to 1975, as wages in the industry improved, and then fell by 13.4 percent from 1975 to 2004 as inflation rose faster than both labor and material costs.1 The rise since 2004 was primarily driven by material costs in the first few years, coinciding with the run-up to the 2000s housing boom, but more recently it has also been driven by labor costs.



Where is construction most and least expensive today?
The following chart lists the ten most expensive cities in the U.S. for construction.2 Five of the top ten, New York, San Francisco, Boston, Philadelphia, and Los Angeles—or six, if we include Sacramento—are expensive coastal cities. Chicago, also on the list, tends to have construction labor that is more unionized than elsewhere. The high cost of construction in Honolulu and Anchorage, on the other hand, probably owes to their remote locations, and in the case of the latter also its climate.3 Finally, Rockford, Illinois, made the list because it is essentially an offshoot of the Chicago metro area, despite being just beyond its official bounds.