Area homebuilding costs are on the rise

by Tina Alvey Dale (tdale@talkbusiness.net) 459 views 

Though costs to build a home are on the rise both nationally and locally, Fort Smith homebuyers should not see the cost handed on to them anytime soon.

Fort Smith area homebuilders are seeing a fairly significant rise in construction costs, said Stephanie Stipins, executive director of Greater Fort Smith Association of Home Builders.

“It is definitely going up on the cost side, but it isn’t going up on the sale side,” Stipins said, noting new home prices in the area are around $122 per square foot to $157 per square foot in the Chaffee Crossing area.

“The tariffs on Canada and China are really affecting everything from flooring to lighting to bathroom fixtures. Delta is up 3.5% on bathroom fixtures,” Stipins said. “With the tariffs on Canada, lumber is up.”

Stipins noted cost for lumber for framing was double this year on the association’s recent showcase house.

According to the National Association of Home Builders (NAHB) the current tariffs on Canadian softwood lumber are pushing up the cost of wood adding about $9,000 to the cost to build a single family home.

“I think tariffs are on the road in the right direction we need to go. It’s just we’re feeling the aches and pains that go with the rising costs. I can see the end game. This is just what we have to go through to get there,” said Tim Mays, a third-generation homebuilder and owner of Tim Mays Homebuilder.

However, tariffs on goods from China and Canada are not the only contributing factor the rising cost of building a home, both Mays and Stipins agree.

“There’s also the cost of lots. Five years ago, you could get a (house) lot for $40,000 at Chaffee Crossing. Now, that price is up to $60,000. And Chaffee Crossing is about the only place we have for new home builds right now. It’s a supply and demand thing. There is less land, the price of it’s going to go up,” Stipins said.

The other issue is a reduction in the labor force. The median age of skilled tradesmen needed for homebuilding in Fort Smith is 58, Stipins said.

“The cost of labor is rising significantly, which is driving up our costs even more,” she said.

Many from the area pool of skilled workers are retiring leaving a limited number of workers available and causing more supply and demand issues, she added.

“What we see now are a lot of college graduates. But this country was built by laborers not just those sitting behind a desk,” Stipins. “I’m not saying anything against those wanting those jobs. We just don’t have a lot of people wanting to do skilled labor. You can make a really good living doing it, but it is hard work.”

In an effort to rebuild the workforce, the Greater Fort Smith Association of Home Builders started an apprentice program in August 2017 as a partnership with Armstrong Bank, Fort Smith Public Schools and Fort Smith Adult Education Center.

“We have classes once a week, and we connect students with an employee for hands-on experience,” Stipins said.

At the end of the 18-month program, students receive a US Department of Labor certificate that allows them to work anywhere in the United States, Stipins said. While participating in the program, students can work with the Adult Education Center to earn their GED, and a partnership with the University of Arkansas at Fort Smith also allows students to use those hours towards a bachelor’s degree in the general technology program, she added.

“By going through this program, it allows these students to become skilled workers who can go really work their way up in the business and earn a good salary,” she said.

Thanks to the help of Armstrong Bank, the program, which would typically cost around $700 for books and fees, is offered to students at no cost, Stipins said.

“I think this will help in the long run with the labor shortage.”

Until that time and until the costs of lumber and other goods levels out, Fort Smith area homebuilders will continue to absorb their rising costs.

“The market will just not allow for an increase in the price of a newly built home,” Stipins said.

Mays agrees that the profit margins for homebuilders are continuing to decrease.

“A lot of people just can’t believe it costs to build a new home,” Mays said. “Over the past six months, I have watched my costs go up greatly. When I started with my dad, it cost (about) $55 a (square) foot. Today, I’m paying $155 a foot.”

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