Montana builder talks construction costs, timelines, and opportunities in the industry

“A lot of smart people have been working on this for years.” That’s what Ryan Frey with Saddle Mountain Construction says of Missoula’s housing crunch. As a home and commercial builder with 20+ years of experience, he’s intimately familiar with the ongoing slog toward housing solutions in Missoula. 

The city and local development community have worked to bolster the housing supply for some time to his point. And while we don’t have the Census data to back up assumptions just yet, there’s no question that a recent population influx put existing housing issues into overdrive. 

As the population increases, what’s it like to be a Montana builder in early 2021? 

“It’s the most difficult it’s ever been,” says Frey, “for a variety of reasons.” One part of this is delivering tough news to clients about rising construction material costs. Lumber alone is up to $34,000 for a typical new home construction project, he says. 

Supply chain links broken at the height of pandemic lockdowns are slowly regaining footing, at least domestically. But, “even in Montana, we’re reliant on global supply chains,” warns Frey. Some international manufacturers are experiencing COVID-19 infection spikes, leading to further delays in all kinds of materials. New builds now come with a caveat that every fixture and finish is subject to availability – that from tile to fixtures and appliances to doorknobs. 

That’s tough for a builder like Frey, who had long prided himself on coming in on budget for projects. “It’s different now – all bids are open book model. Buyers should expect more communication with your builder on pricing, changes to available products, bigger contingencies, and a more time-consuming process,” he says of both residential and commercial builds. 

Why the extended timelines?

Frey says that those supply chain issues, coupled with labor shortages, are pushing timelines out for nearly every project. “As a comparison, you used to get a single-family home done in 6-8 months. Now, it’s more like 10 months as we wait on stalled materials and staffing up a job site.” 

Most manufacturers provide 24-hour quotes on materials – meaning that quoted pricing is only good for about a day before it’s subject to increases. Frey says some suppliers have price jumps scheduled every month through the summer. Pre-ordering and storing items for jobs ups the builders carrying cost – which in turn pushes the ultimate price of the units higher.  

What’s more, says Frey, is that the pool of trade and construction workers is shrinking and the frenzied state of the market fraying nerves across the industry. It’s not just Montana. The number of homebuilders is down across the US, reports the Wall Street Journal. With Missoula’s workforce shortage, securing labor is challenging.

“The average age of an employee in the construction industry is 42. Unfortunately, construction hasn’t been portrayed as aspirational work. As a result, there is very little influx of the next generation into the trade,” he says. “Entry-level jobs in construction start at $15, with room for swift advancement. That’s especially true in the current job market.” 

Stay tuned for Frey’s take on the outlook of Missoula’s housing market next week. 

Contact Ryan Frey at 406-241-4546 or visit https://saddlemountainconstruction.com/.

Contact a Sterling CRE Advisor here.