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Bay Area construction costs are rising about 1 percent to 1.5 percent each month

By Patrick following x   2018 Apr 29, 2:50pm 1,333 views   7 comments   watch   sfw   quote     share    


https://www.mercurynews.com/2018/04/27/construction-costs-could-hamper-bay-area-residential-towers/

“We have more than 6,000 units that are fully entitled and ready to be built,” San Jose Mayor Sam Liccardo told this news organization following the study session. “But developers can’t get shovels in the ground because the development costs are scaring away the financing.” ...

“Construction costs have increased dramatically, especially in the last 18 months,” Don Peterson, senior managing director Northern California for Mill Creek Residential Trust, said during a presentation to the council.

According to Hudacek, construction costs are rising about 1 percent to 1.5 percent each month — which is far above the general rate of inflation, as measured by the consumer price index. Construction expenditures represent 60 percent to 75 percent of the total cost of developing a high-density residential project, Hudacek estimated.
1   Strategist   ignore (2)   2018 Apr 29, 5:57pm   ↑ like (0)   ↓ dislike (0)   quote   flag        

Patrick says
“We have more than 6,000 units that are fully entitled and ready to be built,” San Jose Mayor Sam Liccardo told this news organization following the study session. “But developers can’t get shovels in the ground because the development costs are scaring away the financing.” .


Sounds like BS. With the super heavy demand and record home prices, lenders are not gonna be scared. It's just NIMBYism.
2   TrumpingTits   ignore (1)   2018 Apr 29, 6:48pm   ↑ like (1)   ↓ dislike (0)   quote   flag        

Time to bring in the robots. No, seriously. Right now houses can be 'printed' for $10k - $20k. The final finishing work would still be done by humans.

Would have to require a complete overhaul in how construction inspectors work and when. You know, they would actually have to join the 21st century.
3   BayArea   ignore (0)   2018 Apr 29, 6:51pm   ↑ like (1)   ↓ dislike (0)   quote   flag        

What’s driving a 1.5% monthly construction cost increase?
4   TrumpingTits   ignore (1)   2018 Apr 29, 7:08pm   ↑ like (0)   ↓ dislike (0)   quote   flag        

BayArea says
What’s driving a 1.5% monthly construction cost increase?


Labor shortages & permitting & delays. A lot of electricians and plumbers are retiring and the younger ones who barely have their journeyman card are leaving the state so they could afford a house too.
5   Strategist   ignore (2)   2018 Apr 29, 7:24pm   ↑ like (0)   ↓ dislike (0)   quote   flag        

BayArea says
What’s driving a 1.5% monthly construction cost increase?


The permit costs? You know, the pensions of bureaucrats gets priority above all else.
6   Patrick   ignore (1)   2018 Apr 29, 7:32pm   ↑ like (0)   ↓ dislike (0)   quote   flag        

WarrenTheApe says
BayArea says
What’s driving a 1.5% monthly construction cost increase?


Labor shortages & permitting & delays. A lot of electricians and plumbers are retiring and the younger ones who barely have their journeyman card are leaving the state so they could afford a house too.


Skilled trades are definitely experiencing a severe shortage. I had a previous post about that:

https://patrick.net/post/1315543/2018-04-26-university-degrees-get-consistently-less-valuable-especially-compared-to-high-paying-manual-trade-jobs
7   Kakistocracy   ignore (1)   2019 Feb 23, 2:33am   ↑ like (0)   ↓ dislike (0)   quote   flag        

Goldman Sachs invests in construction finance tech startup Rabbet - Wall Street giant takes part in $8 million Series A funding

Rabbet, a construction finance technology startup based in Austin, Texas, just raised $8 million in its Series A funding round, but that’s not the big story. The big story is one of the companies that participated in the funding round.

Included among Rabbet’s new backers is Goldman Sachs, the Wall Street giant.

According to Rabbet, which was founded in 2017 and changed its name from Contract Simply as part of the capital raise, Goldman Sachs’ Principal Strategic Investments group, QED Investors, and Camber Creek all took part in its Series A.

The company said that it will use the new funding to invest in the development of its platform, which uses machine learning to make the construction process simpler by reducing “administrative burden,” ensuring “instant compliance and faster decision-making” for real estate lenders and developers.

Rabbet said that it will plans to expand it service offerings and build new partnerships with construction lenders, developers and other industry stakeholders.

The funding will also support the company’s efforts to expand its software engineering and sales teams in Austin.

“With the support of Goldman Sachs, QED and Camber Creek, Rabbet will further its mission to bring frictionless transactions to the construction industry,” said Will Mitchell, Rabbet CEO and co-founder.

“Our name represents our commitment to strengthening connections in the real estate industry and fueling today’s connected construction economy,” Mitchell added. “Through intelligent automation, our platform provides operational efficiency, improved customer experience and faster payments, representing a $21 billion opportunity for lenders and borrowers.”

David Bell, managing director of Goldman Sachs’ Construction group, said that investing in Rabbet is a smart decision because of the company’s ability to simplify an otherwise cumbersome process.

https://www.housingwire.com/articles/48265-goldman-sachs-invests-in-construction-finance-tech-startup-rabbet

Note: Maybe a company to consider for investing in. GS usually picks winners


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