Mainebiz

V O L . X X V I I I N O. I X M AY 2 , 2 0 2 2 18 R E A L E S TAT E / C O N S T R U C T I O N / E N G I N E E R I N G F O C U S Number of building permits issues highest since 2007 B y P e t e r V a n A l l e n Maine saw a significant increase in building permits issued last year, sur- passing some benchmarks from the last building boom. According to U.S. Census data, the number of building permits issued last year was the highest since 2007, before the Great Recession of 2008-09. For 2021, there were 6,825 building permits issued in Maine, 4 out of 5 of which were for single-family homes, according to Census data. e value of all that new housing was $1.64 billion. By comparison, in 2007, there were 5,690 building permits issued in Maine, with a valuation of $875 million. It was the last year of a buildup that collapsed with the recession of 2008-09. at building boom actually peaked in 2006, with 7,304 permits issued, and a valua- tion of $1.14 billion. Among the six New England states last year, only Massachusetts issued more building permits than Maine. e Bay State issued 17,661 building permits last year, while New England states overall issued 36,809. While construction costs have spiked in the past two years, the cost of exist- ing houses has also grown, and Realtors have repeatedly said in the past year that inventory is shrinking as is the average time a house is on the market. For 2021, the median home price was $299,000, up 12.22% from $256,000 in 2020, according to the Maine Real Estate Information System Inc., better known as Maine Listings. (e median home price has since surged to $325,000, as of March.) ere were 20,401 homes sold in Maine in 2021, a 2.41% gain from 19,921 in 2020. Median home prices were highest in Cumberland County, $434,900, up from $365,000 in 20020. In York County, the median home price was $398,750 last year, up from $337,000 in 2020. In each county, sales were down single digits from a year ago. Aroostook County had Maine's most affordable houses, with a median price of $120,000, up 14.29% from $105,000 in 2020. Maine's most-northerly county also saw Maine's largest spike in home sales, going up 19.09%. Construction costs rise across the board B y J e s s i c a H a l l e Szanton Co., a Portland-based devel- oper, has a housing project in Bath that will take 19 months to construct, up from a planned timeline of 12 to 13 months. e reason: lack of available labor. "Costs are 30% over budget, so we have to find more sources of funding or find areas to cut," says Amy Cullen, Szanton Co.'s vice president and project partner. "e biggest issue in 2022 is the lack of workforce to build the housing. We need sheet-rockers, masons, carpenters. Construction costs are going through the roof. Material costs, the lack of avail- ability of labor, all relates to the overall price tag," Cullen says. e complaints are the same, whether it's affordable housing, work- force housing or luxury units: labor costs on projects have surged about 30% in the past year and material costs are up 25% to 30% for building necessities such as lumber, window, steel. Time delays also add to costs as the delivery of materials can now be an extra four to five months. Roccy Risbara, president of Scarborough-based Risbara Bros. Construction, which is redeveloping the old Scarborough Downs, says a semi-custom home that used to take five months to complete is now a 10-month timeline. He blames the struggles in get- ting labor and materials. Risbara says his 54-year-old construc- tion firm has had to scramble to buy whatever materials it can get, whenever they can get them, rather than ordering materials on-demand for each project. at means warehousing supplies, which adds to the costs. "Material prices are extremely high and that's if you can even get them. It used to be cabinets, now it's appliances. You can't get a refrigerator in this coun- try right now," Risbara says. "Never in my career have I seen such velocity of price increases and the mar- ket's ability to absorb them," says Matt Masse, vice president of purchasing at Hammond Lumber in Belgrade. Lumber and plywood prices have been volatile, influenced by commodities trading, international tariffs and labor that's been constrained by COVID pro- tocols in Canadian and other producing nations. Doors, windows and flooring have extended lead times for delivery due, in part to labor to produce the products, shipping and freight delays and even a deep freeze in Texas led to a huge runup in specialized chemical costs. "Availability is the problem. And that affects the price," Masse says. "If you're missing one screw, you can't ship the window. Without molding that might be made overseas, you can't finish an interior. And then you can't finish a house. You can't make the cake without the egg," Masse says. » C O N T I N U E D F RO M P R E V I O U S PA G E C O N T I N U E D O N PA G E 2 0 » The soaring cost of construction The price of goods used in residential construction climbed 1.4% in March, following an increase of 2.2% in February and 4.1% in January. This adds up to an 8% jump in building materials prices since the start of 2022. Nationally, building materials prices increased 20.4% year over year and have risen 33% since the start of the pandemic, accord- ing to the National Association of Home Builders. S O U R C E : Producer Price Index, the Bureau of Labor Statistics P H O T O / F R E D F I E L D S O U R C E : U.S. Census TOTAL BUILDING PERMITS ISSUED IN MAINE, BY YEAR '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20 '21 2007: 5,690 2011: 2,299 2021: 6,825 Maine's housing shortage has affected the median home price and and the rate of increase. But it has also had an impact on the number of building permits issued. In 2021, Maine had the highest number of building permits issued since 2007, the end of the last major building boom in Maine. Matt Masse, vice president of purchasing at Belgrade-based Hammond Lumber, says he's never seen materials rise at the "velocity" seen currently.

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