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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 1,018 views   6 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 (3)   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 (0)   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 (0)   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 (3)   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 (0)   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




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