(RepublicanReport.org) – COVID-19 has had a broad range of economic impacts around the globe, including in less obvious ways. Bottlenecks in supply and production have driven prices up in many areas, including the construction industry.
Shortages Are Making Home-Building More Expensive
“Key construction materials” are in short supply across the country, and that’s causing severe problems for builders, according to a new report from The Wall Street Journal. Crucial supplies, such as pipes, ceiling joists, and wood paneling have become scarce in some quarters due to logistics issues.
This shortage has forced builders to look to alternative sources for items like these, often paying significantly more than what they would with their usual suppliers. Several industry players have said they would prefer to incur this expense than wait several months for essential building materials to become readily available.
This problem is a knock-on effect of significant crowding in Asian ports and a shortage of labor in the US. Insiders have stated the disruption is of a scale they have never seen before.
Demand & Supply
The primary issue for consumers is that finished homes will continue to become more expensive, and the limited supply is only one part of the problem. Demand for housing is also strong, as buyers seek to capitalize on lower interest rates taking advantage of cheap mortgages and getting a foot on the property ladder. The COVID-19 pandemic slowed the construction process even when building supplies were plentiful, as restrictions in terms of movement and working arrangements made progress impossible in many cases.
There is a potential silver lining here, though, at least in terms of the prices of finished homes. Once our historically low-interest rates start to rise, mortgages will become more expensive, demand for property will cool, and house prices may level off.
Of course, this outcome is dependent on general inflation as well. Reduced supply and rising demand mean fewer supplies (of many items), resulting in higher prices for nearly everything. Additionally, the generous federal government benefit payments haven’t helped matters. If the Biden administration continues its trend of extravagant expenditures, such as it plans with a multi-trillion dollar social spending bill, it will only make matters worse.
What Happens Now?
There are no easy answers when it comes to the problem of rising prices in general and increased construction costs and house prices in particular. Materials may become more affordable once supply chains bounce back from the pandemic. However, the average American’s price of a home and property could continue to climb for several years.
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