EGG HARBOR TOWNSHIP — Homeowners who intend to remodel or rebuild their homes after Hurricane Sandy might be in for sticker shock, local experts say.
Building supplies such as drywall, siding, doors and windows cost significantly more today than they did just six months ago. Some materials are even approaching or exceeding pre-recession prices, said experts who spoke at a builders conference Wednesday.
The Builders League of South Jersey blamed the high prices on the recession, saying mills and home-products manufacturers who cut back sharply in the past five years have not been persuaded to resume production in the still-lagging economy.
The league conducted a seminar Wednesday at the Shore Diner in Egg Harbor Township on construction issues in the wake of Hurricane Sandy. The standing-room-only conference featured a panel of construction, zoning, insurance and legal experts.
“A lot of mills closed and plants were mothballed during the recession,” league spokesman Rick Van Osten said. “Now, housing demand has risen. But manufacturers are hesitant to start up production. Is the recovery just fool’s gold? And demand (for post-Sandy reconstruction) hasn’t really started.”
As a result, prices for commodities such as lumber are on the rise, especially in recent months.
“In real dollars, they’re not at a new peak. But they’re approaching the prices we saw in 2005,” said Hugh “Mac” Peter, president of Peter Lumber Co. in Pleasantville.
New-housing starts are improving nationwide, raising prices for what construction materials are on hand.
Peter, of Northfield, said his business outlasted the recession and downturn in the housing market because it did not carry any debt.
“We were able to weather the storm, but we’re still not out of it,” he said. “It seems to be getting a little better.”
Michael Kurpiel has been keeping up on construction prices as chairman of the Building Materials Task Force for the New Jersey Builders Association.
Kurpiel said prices have increased at least 15 percent for roofing and siding in the past year, with another 15 percent increase projected for 2013. Drywall prices are up more than 30 percent. And lumber is up between 30 percent and 40 percent over 2012.
The price index of lumber and soft-wood products has climbed, albeit somewhat erratically, from a five-year low of -9.6 set in June 2010 to a high of 6.5 set in January 2013, according to the U.S. Bureau of Labor Statistics.
“The good news is the construction industry is recovering,” said Kurpiel, of Ocean Township, Monmouth County.
“The plants and mills you do have online will only be able to produce a certain amount of product. We’re not even talking about extraordinary Sandy demand, just normal demand,” he said.
If prices continue to rise, homeowners are likely to see far less buying power for the size of a new home, he said.
“The main costs of building a home are the material costs: rough lumber, drywall, roofing, siding,” he said. “You’re looking at the bread and butter of a home being built. If you average these prices out, you’re looking at a 25 percent increase in materials just in recent months.”
DuBell Lumber Co. in Millville has seen a similar increase in construction-products prices, Manager Darren DiMedio said.
“Most of it is supply-driven,” he said. “A moderate increase in pricing was well overdue to bring some balance back to the supply and demand. But where we are now is causing some problems.”
For example, contractors who signed contracts with customers for new construction might have to solicit more money from clients to address the price fluctuations. And the higher prices could prompt some customers to postpone or scale back projects.
DiMedio said a customer last week returned to buy the same product he bought in August and was shocked by the 30 percent increase in price in just eight months.
“There was some pushback on it,” DiMedio said. “But he priced it and realized that’s where the market is now.”
Meanwhile, since manufacturers are making significantly more money on the limited products they do produce, they are under no serious pressure to ramp up production until demand catches up, he said.
“Their incentive to fire everything back up is tempered by their ability to make more money per board foot they sell,” he said.
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