If there’s any consolation for Hurricane Ian survivors, it’s that the rising cost of building materials has begun to slow — and in some cases even reverse.
Thanks to a global economic downturn, what seemed like a relentless rise in material prices over the past two years had begun to fade as Ian hit Southwest Florida on Wednesday in the form of a category 4 storm.
The price of timber, which surged during the Covid-19 pandemic and peaked in January, has returned to pre-pandemic levels, data from CME Group, a global markets firm, shows. This is partly due to a marked slowdown in construction as mortgage rates and house prices rise.
Meanwhile, global shipping bottlenecks have eased, containers available and reducing the cost of freight. Data from the Drewry Index, a global shipping tracking company, shows costs have fallen for 31 straight weeks and are down 61% in the past 12 months.
“You won’t have to spend so much on flooring or kitchen supplies – right now [prices] are falling apart as we speak,” said Michelangelo Cocchiola, co-owner of Imeca Lumber & Hardware in Florida. “If the hurricane had hit two or three months earlier, it would have been much worse than now. .”
National demand for homes has stalled, said Brendan Lowney, director of Forest Economic Advisors, a firm that studies construction costs. The price spike also pushed producers of key commodities like lumber to expand production capacity, which helped cool those price gains, Lowney said.
In addition to lumber, prices of other key home building products like PVC (polyvinyl chloride) and copper are also reversing, according to market data.
The cost of materials “has come down significantly,” Lowney said.
But they are still high. The Bureau of Labor Statistics reported this month that prices for building materials have climbed 4.9% year-to-date and are up 14.3% over the past year.
The sheer scale of the rebuilding to be done could also lead to higher demand and prices from here. According to property information group CoreLogic, early estimates suggest Hurricane Ian will prove the costliest storm in Florida since Hurricane Andrew hit the state in 1992, with a record number of homes and lost properties.
“Hurricane Ian will forever change the real estate industry and the city’s infrastructure,” said Tom Larsen, CoreLogic associate vice president of hazard and risk management. “Insurers will go bankrupt, homeowners will be forced into delinquency, and insurance will become less accessible in places like Florida.”
Hurricane Ian victims and disaster responders are likely to face other rising costs amid an annual headline inflation rate that continues to hover above 8%.
Food price increases continue to reach multi-decade highs. Stephanie Ink-Edwards, CEO of Community Cooperative, an organization that fights hunger and homelessness in Lee County, said among the losses suffered by Ian’s victims is the lack of perishables.. She said food costs were already triple what they were last year in some cases, even before the storm hit.
“The outflow of people in need who we need to serve is now much higher, but the cost of supply is also higher, so we are feeling the pinch on both sides,” she said.
And while gasoline prices have fallen from their summer highs, with a Florida gas tax holiday scheduled for Oct. 1, they remain well above their levels of a year ago. year. On Friday, the average price for regular unleaded gasoline in Florida was $3.39, according to AAA. That’s about $0.33 more than last September.
This week, Costco executives warned they are seeing higher wages at suppliers — costs that will ultimately be passed on to consumers, in some cases.
“Salaries are always the culprit,” said chief financial officer Richard Galanti, adding: “We’ll try to get them off the ground, but I’m sure some of them will stay and some won’t.”
Experts say it will also likely be more difficult – and more expensive – to find skilled labor to help with the rebuilding process. While the global economic downturn may dampen the cost of materials, Florida remains in the midst of a construction boom, said Rusty Payton, CEO of the Florida Homebuilders Association.
“They already have a lot of projects to do,” Payton said. “You’re not going to see a massive migration of people” to southwest Florida.
Lowney predicted that labor costs could rise in the short term as construction contractors ration their services.
“In other words, they will raise their rates as high as the market will support it,” he said.
On the other hand, with demand for jobs in Florida at an all-time high, those displaced from their occupations by the storm are likely to find work faster than in other post-disaster times, said Lowney.
“It will be less stressful if people don’t have to worry about being unemployed,” Lowney said.
At least one local state official estimated Thursday that it would take a decade to rebuild the areas hardest hit by the storm.
“It’s more like Katrina than the Florida storms we know,” State Rep. Spencer Roach, who lost his home in the storm, told FloridaPolitics.com. “There’s a different level of devastation and recovery, and it’s going to affect a lot of people.”