SAN ANGELO, Texas — Lumber is the main natural resource and commodity to build homes.
The San Angelo Chamber of Commerce reports the price of lumber spiking up to 200% since the pandemic began last spring.
The increase in lumber material prices is because of a supply chain imbalance. The timber and lumber companies pulled back on their supply as they thought the construction industry would go down because of the pandemic hitting. The total opposite happened, as more and more people were buying homes to have space to work, teach and live.
Michael Looney, San Angelo Chamber of Commerce vice president of economic development, said the cost of building homes is impacted by the climbing prices of this essential material.
"Mortgage rates are historically low they have never been this low. When you have low mortgage rates, it makes buying a home that much easier to attain," Looney said.
Home Builders Association of San Angelo executive officer Kristen Oliver noted the past winter storm and the pandemic impacted the shutdown of the City of San Angelo and or slowed production.
"People are still recovering from Harvey in Texas and there are other natural disasters around the state," Oliver said.
Looney said keeping construction building costs down is always the goal.
"They will make internal adjustments to make sure that their construction costs work in discretization with the ultimate monthly rent they need to receive. But that's also dictated by what the market will bear and so it is really a challenge for developers to really achieve that balance," Looney said.
The challenge is for the development to not price them out of the market, which the lumber prices can possibly do.
San Angelo for many years had not added too many multi-family and single-family homes. The construction of these buildings has maintained static for the last 10 years. With there being many people retiring and also younger people returning, San Angelo has been experiencing much growth which added pressure on apartment building availability.
"People are moving to Texas in droves and so there's just this need for housing and so people are using that and then you have to couple all of this with the COVID," Oliver said.
Looney said the supply is not meeting the demand when it comes to building homes, thereby affecting the 97%-98% occupancy rate. He said the skyrocketing price of lumber has tremendously impacted the cost of building homes in the area. As a result, the prices to buy homes are passed down to the homebuyer.
"The increase in lumber prices will definitely impact the apartment building section and the single-family home building sector. It makes it more difficult to find more materials," Looney said.
The home builder officials are projecting the economy to eventually get back to normal if the resurgence of infection continues to decrease.