07-20-2007, 06:57 AM
I have several readings on the construction supply business. Home construction, like the sub-prime mortgage business is still unwinding. The big home builders have slowed down construction but have not stopped because it would mean writing off too much of their sunk costs. Infrastructure and commercial building is increasing up so costs of materials like concrete can continue to climb in price.
Hawaii suffers from two problems with regards to lumber. Supplies of desirable structural wood like Douglas Fir come from the Northwest and Canada so they have to be shipped in. When the price of oil goes up as it has recently, shipping charges go up or fuel sir charges make their appearance. The second problem when trying to compare prices in Hawaii versus other parts of the country is that treated lumber is only required in ground/concrete contact situations in most parts of the country. Some of the lumber marketed in Hawaii is HIBOR treated locally. Both situations create a relatively closed market that stifle competition and keeps prices high.
Prices also tend to go up faster than they come down. Retailers are usually reluctant to pass on cost savings if they are not sure they will stick.
We may not see much reduction in building cost but at least I don't think we will be seeing the rapid fire price increases we saw in the recent past. I can remember pricing out materials and finding the price increased by the time I got my order in. I can also remember having to get my order in or buy early to beat a price increase.
Non-materials related costs also impact the cost of building. There is no question that illegal immigrant labor has reduced labor costs in much of the country. Trade unions have had a lock on construction jobs in Hawaii for as long as I can remember. The requirement to have work done by licensed plumbers and electricians are a reflection of the power of the unions. I am not knocking the unions - my father was a union man and it helped pay my way through college. Que sera sera.
Larry
Hawaii suffers from two problems with regards to lumber. Supplies of desirable structural wood like Douglas Fir come from the Northwest and Canada so they have to be shipped in. When the price of oil goes up as it has recently, shipping charges go up or fuel sir charges make their appearance. The second problem when trying to compare prices in Hawaii versus other parts of the country is that treated lumber is only required in ground/concrete contact situations in most parts of the country. Some of the lumber marketed in Hawaii is HIBOR treated locally. Both situations create a relatively closed market that stifle competition and keeps prices high.
Prices also tend to go up faster than they come down. Retailers are usually reluctant to pass on cost savings if they are not sure they will stick.
We may not see much reduction in building cost but at least I don't think we will be seeing the rapid fire price increases we saw in the recent past. I can remember pricing out materials and finding the price increased by the time I got my order in. I can also remember having to get my order in or buy early to beat a price increase.
Non-materials related costs also impact the cost of building. There is no question that illegal immigrant labor has reduced labor costs in much of the country. Trade unions have had a lock on construction jobs in Hawaii for as long as I can remember. The requirement to have work done by licensed plumbers and electricians are a reflection of the power of the unions. I am not knocking the unions - my father was a union man and it helped pay my way through college. Que sera sera.
Larry
Larry