How recent natural disasters and wildfires impact local building costs

From record-breaking hurricanes to devastating wildfires, 2017 has given us some of the worst natural disaster this world has ever seen. And, in the direct aftermath of these monster storms, fires and earthquakes, the construction industry sees a spike in the cost for many of its needed materials. It’s a classic case of supply and demand – there is a surge in demand so strong that local resources in these impacted areas are depleted quickly. Because of this, contractors are forced to get supplies from outlying areas causing higher transportation costs, more overtime wages and other similar hard-cost factors that drive up price of materials.

In our experience, even with the worst disasters, these spikes in prices stabilize after a few months. And, proximity to these disasters directly correlates with its’ impact on the construction industry of an area. So, for those in Houston and even in Texas, the spike in construction costs this past summer and fall was hard to miss. However, for those in Oklahoma City, the spike was more of a hiccup. And, we’re settling down again. We’re confident the spring will be a great time to build with stable prices and available materials.

In fact, our supplier and friend Blake Hurlbutt, Builders First Source Area Sales Manager, said that the recent hurricanes on the Gulf Coast isn’t impacting the OKC much at all.

“There are multiple factors that go into our costs not changing much around here,” he said. “First, there is always some initial panic buys whenever we have a natural disaster of this magnitude. This can be seen in the small bump in lumber pricing shortly after Hurricane Harvey. Second, with national starts being down, there is not enough demand from the storms to significantly move the needle. Third, the rebuilding effort takes time for insurance and government assistance funds to get to these affected areas. And finally, going into winter with the normal seasonal slowdown in activity, this will also help keep prices down.”

He said, for these reasons, he does not expect to see any drastic movement in the lumber market in the short term for these recent storms. However, he did say the recent wildfires in California and the west could present risk in driving costs of lumber skyward.

“The only risk we could see in lumber pricing has less to do with any hurricane rebuilding effort, but more to do with the results of all the wildfires on the west coast and Canada,” he said. “These fires prevented loggers from harvesting rough timber, and it also pulled logging labor away because many of these loggers are also fighting fires.”

All disasters should be offset by both the slower winter months of construction and the slowed national home stats. Together, this should help keep lumber prices stable through the spring.