Hurricanes may blow up construction costs
September 14, 2017
The one-two punch that was hurricanes Harvey and Irma may increase costs for construction in Douglas County, affecting the building industry's fragile recovery.
Planning Commissioner Jim Madsen said costs will go up in price 10-20 percent as materials go to Texas and Florida to aid the recovery from the two big storms.
"I'll tell you right now you can forget about construction activity in this county because Harvey and Irma just took care of it," he told his fellow commissioners. "You can look forward to anywhere from 10-20 percent increase in the cost to build buildings. Watch the migration of drywall and lumber to those areas. We're busy burning up our forests; look forward to increased cost in plywood and lumber."
Madsen said he worked in construction for many years.
"The housing element is now a disaster, and it just happened a few days ago," he said. "It's going to change the economic activity in this county. Housing is already a nightmare. It's going to get worse."
Chamber of Commerce Director Bill Chernock agreed with Madsen.
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He pointed out that after the Loma Prieta earthquake construction costs soared.
"You couldn't get a piece of drywall hung for two and a half years," he said. "You have the power to implement changes to mitigate that."
On Wednesday, Gov. Brian Sandoval toured the Federal Emergency Management Administration Recovery Support Center for those affected by the two hurricanes.
The center is located in the former Ross Dress for Less in northern Douglas County.
According to the governor's office, the center will receive and process applications from disaster survivors for disaster assistance through its toll-free registration number and through online registration.
The center seeks to have 300 customer service representatives working at a time, and is seeking to hire hundreds of individuals.
Candidates will be required to complete a background investigation which includes fingerprinting.
For more information, visit http://www.usajobs.gov/getjob/viewdetails/478377600
Douglas County has already experienced increased construction costs due to competition with projects like the Tesla plant.
County Engineer Erik Nilssen said the more than $2 million overrun on the North Valley Wastewater Treatment Plant is partially due to competition for construction resources due to activity at the Tahoe-Reno Industrial Center in Storey County.
Hurricane Harvey made landfall in Texas at Category 4 on Aug. 25, according to news reports. Damage from the storm is estimated at $70 billion-$200 billion, much due to flooding after the storm dropped heavy rainfall.
Irma was a Category 5 hurricane that did more than $50 billion in damage in the United States. It struck Florida on Sept. 9.
Douglas County was experiencing an increase in housing activity through the end of July.
Through July 31 of this year, there were 74 new home starts in the Carson Valley part of Douglas County, as well as six duplex units. A year earlier, there were just 13 new housing starts and zero duplex units being built.
According to the U.S. Census Bureau, there were 162 building permits issued for housing in all of Douglas County in 2016. From 2010 through 2016, there were just 317 homes built in the entire county. East Fork Township was on pace over the past six months for development of nearly one-quarter of the total number of homes erected over the past six years.
Douglas County homebuilders tend to be local contractors who erect a few homes at a time over the course of a building season rather than bankroll development of entire subdivisions, according to Sierra Nevada Association of Realtors President Steve Bohler. Most of the new housing activity is near downtown Gardnerville on east side of Highway 395. Most new product is intended for middle-income homebuyers – prices are in the $350,000 to $400,000 range. However, several of the new home starts in the Carson Valley are large custom homes that far exceed that price range.
Resale activity remains brisk. Through July, there were 501 homes sold in Carson Valley.
Average sales price was $403,142, and homes were listed for sale an average of 74 days. Last year during the same time frame there were 502 sales with an average sales price of $240,388, and homes were on the market an average of 100 days.
Prices are up, and average sales time is falling.
Lower-price homes are selling much faster than homes above the $500,000 range. The average asking price of all pending properties is $487,844, while the average asking price for all homes still available is $735,585.
Sales activity in the area is expected to slow over the next six months as inventory of homes for middle-income buyers tightens. Much of the remaining inventory for sale is targeted for upper-income buyers.
Of the 136 pending home sales, 96 are selling for under $500,000. That's 70 percent of the entire resale market in the Carson Valley.
Freelance writer Rob Sabo contributed to this report.