Construction Costs Trends in Chicago - June 2022

[Frank S.]

Hi BP Heads,

I have a duplex down, kitchen, bath,  and garage project in mind in the north area ( I had been postponing for a few years) and kitchen/bath, aesthetics renovation in Little Village.

Have the construction costs cooled a bit based on the increased rates or is this still too early to notice?  I recall wood, and everything else, was very pricey last year.  Contractors were super busy - hence, higher rates.    E.g., I had a 30/hr carpenter that is now asking 60/hr. He is not worth 60/hr.

I received a few leads for architects and contractors, and I am open for more leads, but constructions costs are making me scratch my head.  

What does your crystal ball tell you about Chicago costs?

Thanks, 

Frank

[Jonathan Klemm]

Hey @Frank S. - I'd say in general construction materials have risen with inflation and will unlikely come back down.  However, those crazy lumber prices have leveled back out and those were more so due to supply chain issues than inflation which makes sense why it has come back down and fallen in line with our standard inflation.

We are still seeing long lead times for items such as windows, doors, and some tile.  Finding a QUALITY carpenter for $30/hr doesn't seem likely, we usually figure about $50/hr minimum and the best are around $65-$75/hr.

As far as architects go if you haven't connected with @Prashanth Mahakali or @Samuel Pavlovcik they are both great Chicago architects.

My crystal ball feels a slowdown, but data-driven investors will still be able to find deals and real estate will continue to strive with low inventory as the rest of the economy continues to slow down slower and slower.

[Eudith Vacio]

Hey @Frank S.- it is hard out here to find contractors but what I'm hearing and also seeing is that materials have nearly doubled and in some cases tripled. I would say keep looking for leads and in maybe look in the winter when their jobs tend to slow down a bit more?

Best of luck :)

[John Warren]

@Frank S. I am very grateful to have mostly the same crews from years past. My main costs have been increases in construction materials, and those have been more modest than folks have been led to believe. I am seeing maybe 25% increases across the board, which isn't the end of the world. 

[Crystal Smith]

Quote from @Frank S.:

Hi BP Heads,

I have a duplex down, kitchen, bath,  and garage project in mind in the north area ( I had been postponing for a few years) and kitchen/bath, aesthetics renovation in Little Village.

Have the construction costs cooled a bit based on the increased rates or is this still too early to notice?  I recall wood, and everything else, was very pricey last year.  Contractors were super busy - hence, higher rates.    E.g., I had a 30/hr carpenter that is now asking 60/hr. He is not worth 60/hr.

I received a few leads for architects and contractors, and I am open for more leads, but constructions costs are making me scratch my head.  

What does your crystal ball tell you about Chicago costs?

Thanks, 

Frank

Anything associated with Lumber we do our best to lock in the material price when we start a project.  Lock in meaning purchase right away, even if we're not ready to use it, or lock in the contractor.  We failed to do this on a garage project and the $15K garage became $20K in less than one week because we failed to sign the contract on time.  We've also increased the contingency numbers on all our projects.

[Frank S.]

Thank you for the information.   The last rehab I did was several years ago and I'm definitely getting a sticker shock. Also, my frugal personality is keeping me in check. 

I'm seating on cash waiting to pull the trigger on the rehabs, but they are not urgent.  I would buy a rental building, but the returns are too low to even bother.  The work needs to happen sooner than later - one of them is my home. 

I may have to face the music and do it this fall.  A good old stock market collapse and a recession are welcomed, but it may take time to see the results.

(Oh, and forget about buying a new car...)

Again, thanks for the feedback.