The construction industry, like all industries, goes through changes on a very regular basis as trends and the economy changes.
In the mid-2000s, for example, the recession and the troubles in the housing market led to the construction industry experiencing its own recession. Few people were having new homes built, and many businesses were unable to expand into new facilities because of the decrease in profits.
However, as the economy began to see major improvements in the late 2000s and early 2010s, the construction industry has also seen some positive changes.
Home Construction Costs Have Increased
When it comes to building homes, the cost to do so has increased considerably. In fact, the cost is actually increasing quicker than the standard consumer price index.
In February of 2014, the cost to build a new house increased by 7.8 percent from February 2013. Since February of 2012, the cost has increased by 15 percent. While experts don’t necessarily expect the cost to continue to increase at such a large rate, they don’t see this trend stopping any time soon.
The cost of buying new construction, has overall, been higher than the cost of purchasing an existing home. One reason for this is that a number of people lost their homes during the housing market crisis, and those homes have sat empty for several years. They are no longer in a condition to be sold for their true value.
Another larger factor, however, is the fact that the cost to build a house is much higher now. In February of 2014, the average cost of buying a newly built home was 38 percent higher than the average cost of buying an existing home. Generally, this gap isn’t more than about 20 percent.
Building Commercial Buildings
Thanks to the latest in construction software, managers have been able to track exactly where the increase in construction costs for commercial buildings has come from.
Generally, the cost of raw materials and tools has actually remained fairly steady over the years. However, engineered or manufactured components have slightly increased. If this were the only change, commercial projects would probably not have risen much in price.
However, it’s not. There are several other factors that have led to the rising cost of commercial construction.
This includes labor cost. As the economy recovers, more and more businesses are seeking to expand, leading to an increase in projects available. The number of construction workers has not grown as quickly as needed, leaving many companies with a larger number of projects but without the manpower necessary. This means workers can ask for higher salaries and receive them.
Overall, the commercial industry saw a change of 1.24 percent in the second quarter of 2014. While this isn’t huge, the industry has seen costs grow since 2010, and there seems to be no indication that it’s going to slow down.
With increases in both commercial and residential construction, construction crews can look forward to steady work and income for at least the immediate future.