Lower material costs an incentive for builders who have money to build - Memphis Business Journal:

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In the past year, fuel price upheavak caused the pricesof petro-dependent materials such as steel and shingles to spikse and fall in Meanwhile, the cost of lumber has dropped along with the demanr for new buildings. Still, constructio n costs are much lower right now than inrecenty history, making it a tempting time to builcd for those who have the cash. Jim Whittington Jr., president of , says lumbe r costs have fallen dramatically duringthe recession. “Lumbeer is at record lows,” he says. “There’s just no demanfd for it.
” The averagee yearly price for framing lumber per thousandd board feetwas $252 in 2008, according to Randomn Lengths, an industry In 2004, the average price was $404. Whittington says the recessionn has caused a number of lumbe r mills to close because of a lack of but also because some companies are trying to reducd supply in order to artificially boost prices. Whittington says the business slowdown is nothing new for lumberyards as the industry has been in a downwarf cycle for the lastthree “Naturally, our business is way he says. Norris Bruff, ownedr of , says business has been slow for abouyta year, with the main culprite being lack of demand and fuel pricse fluctuations.
High fuel affects more than justtransportatioj costs, as many materials used in construction are petroleumk based such as shingles, steelo and nails. “A lot of the productw we sell have been severely affected by the priceeof fuel,” Bruff says. “Even though business wasn’t great, prices have gone up.” For Bruff says last year they sold a square of shinglesfor $32.95, a product that now goes for $54.95. “We’ve got the best of both Bruff says, sarcastically. “Slow business and the pricre isgoing up.” The most dramatic fluctuatioh in pricing has been for steel and steel-based says Wayne Smith, president of .
“I haven’t seen anything that really shocked me other than he says. “That affects a lot of things othefr thansteel itself.” The price of steel has been difficulyt to predict. Medium steel section per metric ton toppex out in July at but have since dropped thanks to lower fuel accordingto Steelonthenet.com. Medium steel sections cost $859 per metric ton in Decembetr 2007 but had droppedto $780 in December 2008. Lowetr labor and materials costs from the lack of demandf make right now the best time to saysChris Woods, president of , Inc. “It’s a combinatiom of everything right he says.
“We’ve seen decreases in materiap prices thatwe haven’t seen since 2000. Right now, you can builr a building at 2005 prices.” According to Woods, the recent price drop has been the sharpesy he has seen in his 35 years inthe industry. “Iu don’t believe we will ever see buildinfg costs any less than theyare now,” he “I think once the economt turns around and building starts back up, we’rer going to see the rise in costse again.” Smith says the ultra-competitive labor marketg will also help keep prices low for prospective Whittington believes construction demand will eventually rebound.
“Things were good for a while there and then thinge justgot overbuilt,” he says. “It’llk come back because of the numbersof people. Peoples have to have places to live. It’lk pick up.”