Construction may be the most volatile industry in the world. The U.S. is in turmoil when the gross national product, the rate of inflation, or employment changes by even a couple of percentage points, yet construction regularly grows and contracts by 10%—and sometimes far more—in a matter of months. The volatility of the past year, however, has been completely unprecedented. As we emerge, tentatively, from the Covid shutdown, there has been a surge of demand for projects, people, and materials.
The pandemic has changed everything. Right now, anyone building anything is in uncharted territory. Whole sections of the construction world are topsy-turvy. After a series of unusual price explosions, lumber is finally becoming more available and less costly. Steel prices remain insane. But some materials and products have become either unavailable, or their price changes weekly.
Supply-chain issues have made every material, every product, every fixture a crap shoot of availability and cost, almost spinning a volatile industry out of control.
In May, legal analyst Barry LePatner predicted that “the construction industry will exit from the pandemic at the early stages of a $35 trillion construction boom resulting from pent-up demand, governmental intervention, and changing U.S. demographics. But before addressing the good news to come, contractors will need to grapple with key financial constraints either caused or exacerbated by the pandemic.” And the market has further exploded over the last six months.
One contractor I know had three concrete suppliers dishonor their contracts with him to take on higher-paying projects; now he’s building his own forms and becoming his own “concrete guy.” One of my firm’s projects that used generic steel bar joists went to bid and, voila: no bar joists in the U.S. for the forthcoming year! The client had to pay us and our engineer for a complete restructuring. Another project had a builder ask for add after add to his stipulated fixed-price contract because “Covid made me do it,” one time after that part of the project was done. (Can you spell “legal dispute?)
So architects, who are always riding the roller coaster of construction volatility, have seen that thrill ride become ridiculous and dangerous after a fairly boring decade. From 2008 to 2018, the entire country was mired in the wake of a disastrous boom, when the first years of the 21st century had seen the costs of homes rise to unaffordability, and then the entire world economy tanked because America’s housing sector was grotesquely distorted by greed. As the Great Recession ebbed, there was, eventually, stability in architectural practice. Costs were predictable. Some people ventured into construction.
Until the pandemic. Do architects remember the building bust in April 2020? Canceled projects. Silent phones. Laid-off employees. Then, something happened: Months of isolation made people rethink the way they wanted to live at home. That meant their buildings would need to change, which meant construction, so architects became useful again. But the craziness of this new era has made builders and architects simultaneously empowered by their new in-demand status and perpetually threatened by costs and availabilities of the products and people necessary to build things.
Buildings have always cost a great deal of money; indeed, large sums are required before construction can even begin. Since every site is different, every project has risks that are unknowable until it’s time to build. Every project meshes with scores of suppliers and trades, each facing its own economic realities. The variability of those realities never changes, boom or bust, and even now in today’s wacky world. But now architects are being approached by potential clients who’ve seen their name on a website or industry list, but have no sense of value beyond their own immediate design needs.
Like windows or flooring, the cost of an architect is subject to the value they confer beyond meeting a need. Well-made products cost more and are purchased because they offer more value than cheaper versions. What architects do is judged by that same valuation exercise. In addition, the intense desire to build now following months of sequestration finds architects without the ability to properly respond. Finding plumbers and electricians may be hard, but finding architectural staff is nearly impossible, as those who had a whiff of doing their own work are suddenly in higher demand. Why work for a boss when you can design your own projects?
The last season has seen four homeowners dip their toes into building and use my firm to scope out the time and money involved; when those inflated numbers and indeterminate dates were revealed, they opted out.
If the past is prologue, this boom shall soon be a bust. In my little corner of this world, the last season has seen four homeowners dip their toes into building and use my firm to scope out the time and money involved; when those inflated numbers and indeterminate dates were revealed, they opted out, even though they were delighted with our designs. Three sold their properties, purchased on the Covid upswing, for a profit. Others forged ahead, and good builders are staying ahead of the chaos with constant communication.
As an architect who has been through five booms and five busts in 45 years, I have been relentless in seeking out cost and schedule realities as early as possible to head off panic and recrimination. After the 2008 bust, there was a lingering decade of depressed activity and lowered expectations, but in recent years the market had stabilized, even becoming, dare I say, predictable. But in the last two years, the whipsaw of Covid collapse, followed now by the frenzied restart, has become mind-numbing and not just a little ironic. That confusion has become a little slice of Hell for many of us, as imponderable delays, double-dealing contractors, and ridiculous supply issues are creating a vortex of dangerous unknowables.
Almost 30 years ago, Hurricane Andrew destroyed hundreds of thousands of homes in south Florida, and within weeks no one anywhere else in the U.S. could find any number of generic building materials, as the immediate need to rebuild there trumped the ongoing needs of the rest of the country. That foreshadowing of the present Bizarro World of Construction should chasten everyone, as normalcy returns in a year. But right now, it is weird out there, and getting weirder.
Featured image by the author.