Building strength

Residential construction, remodeling flourish as people shift spending

Posted on Apr 29, 2021 :: Construction
Jessica Thiel
Posted by , Insight on Business Staff Writer

When the pandemic began to intensify last spring, Brian Rohm wasn’t optimistic about the effect it — and the accompanying recession — would have on his residential construction business.

The owner of Calmes & Rohm Construction expected a slowdown and that people would want to hold onto every dollar, given the uncertainty. Instead, the opposite has transpired. During this pandemic-induced recession, consumers have shifted the way they spend money. Instead of taking a trip to Disney World, they might invest in remodeling, outdoor renovations or even a new house.

“They’re more willing to spend the money now than they’ve ever been,” Calmes says, noting that his customers also aren’t skimping on fixtures or features in the houses he’s building.

Whether they’re working with a contractor or pursuing DIY projects, people are realizing if they have to spend more time at home, it’s worth investing in their spaces, Calmes says. As a result, Calmes’ company is booked into fall of 2022.

Ben Vosters of Kaukauna-based Lloyd Vosters & Son Home Builders, which does new construction and home remodeling, has seen a similar boom. His company has taken on several large-scale projects that require gutting the entire house as well as completing a lot of kitchen and living area remodels. Kitchens have become the showpiece of many homes, Vosters says, and a kitchen island is always a go-to gathering spot. 

“A lot of people are finding that they’re gathering in their kitchens more than they are in their living rooms compared to 25-30 years ago,” he says.

Andy Selner, who co-owns Alair Homes Green Bay with his wife, does both new construction and remodeling jobs. His clients are increasingly interested in finished basements, rec rooms, bonus rooms and projects designed to provide more space.

“People recognize that they need to get away from each other a little bit,” he says.

As the virus kept some people from going out in public and spending time with others outside emerged as a safer option, many also have chosen to upgrade their outdoor living spaces. Screen porches and patio heaters have become popular, says Vosters, whose company also does outdoor projects.

Mari Charles, executive officer for the Brown County Home Builders Association, has observed the same trend. Homes have become a source of entertainment now more than ever, she says. People who can afford them are adding luxury features such as swimming pools, basketball courts, golf simulators or deluxe home offices.

“I saw people’s needs shifted from working in an office to working from home and also their priorities shifted from spending money on vacations or other entertainment-type expenses to then using those funds to do renovation projects or look at building their dream home,” Charles says.

For those who are building new homes, many builders say clients increasingly want ranches, in part because they’re thinking long term about accessibility as they age. Mike Hietpas, owner of Hietpas Homes, says most of the ranches he builds have zero-depth entries, large walk-in showers, ADA-accessible doorways large enough to fit wheelchairs and hard-surface floors instead of carpeting.

Most new home construction also is taking place in outlying areas surrounding bigger cities because that’s where the developable land is, Calmes says. Some people also choose to build in towns or villages because they have lower taxes. Many clients still want wooded walk-out lots, but they may be out of luck. “They just don’t exist. Those places are gone,” Calmes says.

Challenges intensify

Even as demand continues to go strong, challenges are mounting around cost and access to goods and labor shortages in the skilled trades. 

Hietpas says he and the subcontractors he works with are seeing unprecedented delays in materials. “I never thought that I’d see it where people are saying, ‘We might not have that supply by July or August,’” he says.

Prices have increased for all materials, from lumber to sheet metal to concrete to electrical wiring to piping. The price of lumber alone has increased 193 percent since March 2020. The cost of electrical wire has jumped 120 percent in three months, and plumbers are limited on how much pipe they can get from supply stores.

“It really seems like we’re getting hit just purely on raw materials. Raw materials are in everything, so we’re seeing increases across the board,” Selner says.

Calmes says he’s concerned about where people’s limit lies. They’re already paying around $35,000 to $40,000 more for a 2,000-square-foot ranch than they did a year ago. High prices also mean “affordable housing is becoming a thing of the past,” which is problematic because everyone needs a home, he says.

The shortage of skilled trades workers, including plumbers and electricians, also is driving up costs — and making it difficult to get work done on time. 

“It’s a constant scheduling logistical nightmare to make sure that everything happens as it should on your project when you’re sharing so many subcontractors and there’s just not enough workers to go around,” Hietpas says.

To attract new workers, BCHBA’s Charles says her organization does outreach at all educational levels, but it’s especially important to reach kids by the time they’re in middle school, when they’re still making decisions about high school course selection. 

Calmes agrees and says recruiting the next generation of workers will take time and it’s important to start advocating now. He does see some hope on the horizon. “At some point, you’re going to be paying so much for skilled labor to do work for you, it will bring back people wanting to do the jobs,” he says.

With all the uncertainty surrounding access to labor, goods and costs, Selner says it’s hard to plan ahead. While he’s booked into next year, setting expectations for clients about costs and timelines is no easy task. 

Even amidst the volatility, though, Selner expects business to continue to go strong for the next few years. The inventory of new homes is still low and demand for new construction is still high. In addition, low interest rates and a strong market for existing homes are helping offset the increased construction costs. 

“From what I’m seeing and hearing on a national level, it’s going to be strong yet for a while. Our only hope is that we can at least level off to bring prices down where they need to be to make it more affordable,” Selner says.