Residential Construction Pricing Rebounding

Many of my clients have been asking me if this is a good time to be doing improvements on their home or even building a new home. I think it's a great time to do a project! We've received bids on two projects (both custom homes) in the last two weeks and the pricing has been very encouraging. Contractors and their sub-contractors - even the best contractors we work with - are hungry for work and are negotiating management fees at an all time low. Typically these fees range upwards of 20% of the costs of construction (including management and project supervision - which are normally billed as an hourly rate in addition to the typical 15% overhead and profit mark-up). The selected contractor for one of the above mentioned projects proposed an 11 1/2% fixed fee, which INCLUDES the project management hours.

All in all, I feel it is a GREAT time to be having work done on your home. Even more, we've seen in the last few weeks that pricing on construction materials is heading back up after a steep decline over the last year. My opinion is, if you're looking to take advantage of the bottom of the cycle, time looks to be running out. Don't panic, though...I don't think construction prices will rise steeply in the same manner that they've fallen. If you're waiting on the fence trying to time the market to get the maximum value for your home project dollar, my feeling is that now is the time.

As a touch point for this idea, I recently saw the following chart from Plywood Supply, a local lumber supply company who furnishes framing lumber on many of our projects. The chart shows the typical cost of lumber for a 'standard' home that they apply the current material costs to:

Photobucket Link to Chart

The trend is apparent in the chart...pricing looks to be back on the upswing, so if you've been dreaming about doing a project, you may want to consider moving quickly to make it a reality!

Ask one of the great Pro's on HomeSavvi to meet with you at your home or potential project site and generate some initial concepts to talk about how you might best capitalize on the great pricing in the market right now. Above all else...have fun!