While worries regarding the COVID-19 crisis persist, construction is on the road to recovery, according to analysts.
“Construction activity continues to dig itself out of one of the deepest and shortest recessions in U.S. history,” says Richard Branch, chief economist at Dodge Data & Analytics. Still, he warns, “it will be a long road back. Through eight months, the value of total construction starts is 14% below 2019.”
Non-residential starts are down 24% on a year-to-date basis, with declines across the board, according to Dodge data. Branch notes that warehouse construction continues to be the one strong spot, as the popularity of online shopping continues. Non-building construction is down 20% overall, despite growth in the streets and bridges sector. The largest projects that broke ground in recent months include the $1-billion Facebook data center in Gallatin, Tenn.; a $740-million Texas Instruments fabrication facility in Richardson, Texas; and a $1.3-billion wastewater pollution control plant in San Francisco.
Residential construction has remained fairly strong, down less than 1% year-to-date. “Strength in single family starts is offsetting weakness in multifamily construction,” says Branch.
As for the future, Branch points to the end of government programs as a stumbling block for the industry. “The expiration of enhanced unemployment insurance benefits and small business loans that were provided in the CARES Act, the budget crises facing state and local governments and the impending expiration of the FAST Act on Sept. 30 will all have a dampening effect on starts in the months to come,” he says.
David Burstein, senior principal of AEC consulting firm PSMJ Resources, agrees. While PSMJ’s Quarterly Market Forecast (QMF) survey reported that fewer than 15% of respondents had major project delays or cancellations as of August of this year, federal funding will be necessary for this trend to continue.
“The question for 2021 is whether the feds will step up to fund the tax shortfalls experienced by state and local agencies,” says Burstein. “My guess is that they will, but it’s not a certainty. If the feds don’t step up, 2021 will be a rough year for A/E/C firms that serve the state and local markets.”
Fewer than 5% of respondents to the QMF survey reported significant staff reductions, which Burstein credits in part to the Paycheck Protection loan program.
“The AEC Industry has fared much better than most industries during the COVID-19 pandemic,” he added.

Lumber Prices Rising

In the commodities sector, the big story is lumber prices, which have risen 250% since bottoming out in April, according to IHS Markit.
“We have definitely seen some extraordinary increases on lumber prices, specifically softwood lumber prices, here in North America,” says Deni Koenhemsi, senior economist at IHS Markit. 
In its third quarter forecast, IHS Markit is predicting a 19.1% increase in softwood lumber prices for 2020, a huge  turnaround from the second quarter forecast, which predicted a 0.7% drop in prices for the year. Plywood prices are now expected to be up 4.5% for the year, after a 3.3% decline was predicted in the second-quarter forecast.
Koenhemsi attributes the rising prices to a “classic case of mismatched supply and demand.”
“When the pandemic reached the U.S., producers in the U.S. and Canada both decided to cut production, thinking that housing construction will slow considerably,” she says. But demand quickly rebounded. “We have seen a V-shaped recovery for housing starts and permits.”

Labor TrendsThe latest Construction Labor Research Council report on union labor trends shows that the Northwest region received the highest wage increase in 2020, at 3.9%, up from 3.4% in 2019. The Northwest region includes Alaska, Idaho, Oregon and Washington.
The South Central region, which includes Arkansas, Louisiana, New Mexico, Oklahoma and Texas, recorded the lowest wage increase for 2020, at 1.8%.

American Union Services is a contractor based in Lawrence KS.  AUS provides services in light gauge steel stud framing, sound and thermal insulation, drywall, drywall finishing, acoustical ceiling, installation of doors, frames and hardware,  fire and corridor shaft-wall systems and general contracting.  AUS serves Lawrence, Topeka and Kansas City KS areas.  You can reach American Union Services at 785-840-4040 or [email protected]  based out of Lawrence KS.  Framing contractor, Lawrence, Shawnee, Lenexa, Olathe, and Topeka KS.  Drywall contractor, Lawrence, Shawnee, Lenexa, Olathe, and Topeka KS.  General contractor, Lawrence, Shawnee, Lenexa, Olathe, and Topeka KS.

When home owners take on a remodeling project, they’re often far more focused on choosing glistening fixtures for a new bathroom or debating the type of granite to use on a kitchen counter top than, say, navigating the intricacies of the building permit process. That could be a huge mistake, however, and it may not even come to light until the house is put up for sale. Ignoring local approval requirements not only poses safety and legal problems but also can potentially derail an otherwise smooth sale.
Home owners using licensed contractors for remodeling work typically don’t have to get involved with permitting. Most licensed contractors will handle the cumbersome process for them—filling out the paperwork with the municipality, collecting fees, and being present for the required inspections, says Michael Hydeck, president of the National Association of the Remodeling Industry. But when home owners tackle do-it-yourself projects or use unlicensed contractors, they risk problems later.
The permit process varies widely from city to city and state to state). But the purpose of the document is the same everywhere: It offers ­assurance by a municipal building department that the work being done meets all safety codes.

Ask Sellers Before You List Home owners may be asked about permits in the process of selling a home. At closing, they may have to disclose any remodeling work they did and verify permits. A home inspector evaluating a property for a buyer may want to know whether a permit was obtained. Furthermore, the buyer’s appraiser may want to see permit records to check the legality of any home renovations.
“If no permits are found and it’s obvious the home has been renovated, the bank will likely refuse to make the loan,” according to the American Bar Association’s book Legal Guide to Home Renovation(Random House Reference, 2006). If the permitless work isn’t discovered until after closing, the home’s value could even be subject to a lawsuit, such as in cases when an addition added extra square footage to the home’s value but the construction wasn’t done legally with a permit.
That’s why contractors and legal experts say real estate practitioners are well advised to ask sellers before they take on a listing for a renovated home: “Did you get a permit for that?”
Remodeling contractor John Price in Merced, Calif., has been called in to help home owners after permit problems have been uncovered. He once worked with a home owner who installed siding by himself, but added it too far down along the wall of the house, so it rubbed up against dirt and picked up moisture. Eventually the poor installation led to mold growing in the drywall throughout the inside of the house.
Some home owners, however, are tempted to sidestep the permit process not wanting to pay the fees (municipalities generally charge a minimum issuing fee—such as $25—as well as an additional fee—sometimes 1 percent—of total construction costs), or they might not want to risk delaying a project or a sale by waiting for city inspections (obtaining permits can take anywhere from a day to six weeks or more).
“People have strong incentives to cheat, and some of that lays squarely on the feet of policymakers who have sometimes created a system that is time-consuming and frustrating,” Price says.
But caught without a permit during resale, home owners may face big consequences. They may have to pay fines (possibly up to quadruple the original permit cost) or may have to tear the project down and redo it.

Virtually No Job Is Too Small Home owners making any changes to the structures of a home will likely need a permit—and you may need more than one, Price says.
While kitchen and bathroom remodels and housing additions are obvious permit candidates, people may not realize they might also need one for such projects as installing a window, adding a new light switch, or replacing a shower. “There are not too many jobs you don’t need a permit for,” Hydeck adds. “It’s better to be safe than sorry.”

​American Union Services is a contractor based in Lawrence KS.  AUS provides services in light gauge steel stud framing, sound and thermal insulation, drywall, drywall finishing, acoustical ceiling, installation of doors, frames and hardware,  fire and corridor shaft-wall systems and general contracting.  AUS serves Lawrence, Topeka and Kansas City KS areas.  You can reach American Union Services at 785-840-4040 or [email protected]  based out of Lawrence KS.  Framing contractor, Lawrence, Shawnee, Lenexa, Olathe, and Topeka KS.  Drywall contractor, Lawrence, Shawnee, Lenexa, Olathe, and Topeka KS.  General contractor, Lawrence, Shawnee, Lenexa, Olathe, and Topeka KS.