Builders aren’t the only ones dealing with rising lumber prices, supply shortages, and hard-to-find labor. Habitat for Humanity—the nonprofit organization that builds homes for Americans in need and is No. 20 on the 2021 Builder 100 list—has felt the burn, too.
According to the national office and Habitat representatives across the country, supply chain issues—not to mention the unique challenges of the pandemic—have complicated the organization’s efforts for much of the past 18 months.
“COVID restrictions, labor shortages, material delays, surging prices on lumber and fuel, and the meteoric jump in real estate prices have all impacted our construction work,” says Erin Rank, president and CEO at Habitat for Humanity for Greater Los Angeles.
The problems are making it difficult to not only keep up production but also to stay on budget as well. In fact, according to the national office, overall home production is down 4% compared with last year, and the average Habitat branch? They’re dealing with increased construction costs of $10,000 to $15,000 more per house.
In Los Angeles, a recent project’s framing costs jumped 360% due to spikes in lumber prices. In Chicago, roof framing costs have doubled, concrete costs rose 13%, and plumbing and electrical costs increased 11% and 10%, respectively.
“All of these are adding up,” says Jen Parks, executive director of Habitat for Humanity Chicago. “Overall, our construction costs, including subcontractors and material costs, went from $222,000 to $247,000.”
The price spike is putting pressure on the organization’s fundraising efforts and making budget constraints a prime concern.
“Our fundraising team is amazing; they’ve worked tremendously hard, but these costs are having a very real impact on their work,” Parks says. “They have to raise more money now.”
To make matters worse, Chicago also had corporate donors pull back during the pandemic—both on funding and on sending out volunteers.
“Our team is working very hard to build that support back, but it's taking a much longer time than we had anticipated,” Parks says. “We're still in the midst of this.”
More Than Just Financial Struggles
Rising construction costs and increased fundraising demands are only two of the supply chain symptoms facing Habitat for Humanity. According to Rank, there are also construction delays to tackle.
The Los Angeles branch saw house production drop 50% from June 2020 to June 2021, and, on some projects, problems getting lumber, truss fasteners, and appliances held completion up anywhere from two weeks to six months. Appliances, which have faced incredibly long backlogs in recent months, have also held up things.
“Appliances were very difficult to come by for the last few homes of our most recent project,” says KC Roney, senior director of programs at Habitat for Humanity Philadelphia. “There were many, many hours spent on the phone tracking down appliances for those homes.”
Labor shortages—as in most of the country—are a major hurdle, too. In Chicago, the pullback of corporate volunteers had a big impact, while in other areas local pandemic restrictions, or just the health concerns that came with the pandemic, saw volunteerism drop off as well.
“We've not yet seen a return to pre-pandemic levels of volunteerism,” Parks says. “And that's the other piece that's really a challenge. It means there's more pressure on our staff to fill those gaps.”
Habitat for Humanity uses volunteers on both its build sites and in its ReStore locations across the country. ReStores are home improvement stores and donation centers that sell gently used appliances, construction materials, furniture, and more.
In the latter case, the shortage of volunteers came at a difficult time. According to property data firm BuildFax, remodeling activity has increased notably since the pandemic began (85% in Philadelphia alone). In many areas, the surge sent homeowners and contractors flocking to ReStores for supplies.
“Our ReStore in Philadelphia was closed for more than 80 days at the onset of the pandemic, but hit the ground running when it reopened,” Roney says. “We saw a huge increase in sales driven by shoppers who were working on home improvement projects in need of equipment and decor.”
Despite all these headwinds, Habitat for Humanity is finding creative ways to continue building homes for those in need.
The Los Angeles branch, for example, has started to partner with local builders and construction companies for help.
“Four major international construction companies with offices in Los Angeles each stepped up to help us build four homes for waiting home buyers,” Rank says. “They are so much larger than us, and they were able to lean on their vendors and subcontractors to help us out.”
Habitat Los Angeles also has adjusted its home designs to use more readily available materials and made it a point to pre-order supplies months in advance of most projects. Other branches are actively monitoring pricing trends and bulk-buying supplies whenever possible.
In the end, though, Habitat representatives say it’s all about being flexible and, most important, keeping the homeowner top of mind.
“We're in this for the long haul,” Parks says. “It's not about just the house, but the home buyer that matters. And even if we have to slow down or stop construction on a home, we're making sure that that's not going to impact one of our home buyers.”