The exterior of Healdsburg Lumber’s new location at 13534 Healdsburg Ave. in Healdsburg. [Photo courtesy Bee Vera Construction]
The Federal Reserve is potentially going to begin cutting interest rates in May or June. There are signs that the decreases will occur in a series of rate reductions over the rest of the year. Still, construction may be sluggish for months. It takes time to get projects approved. Already approved and fast-tracked projects could see more progress between the late spring and early fall, depending on weather and fire conditions. It is also good news that increases in materials prices are not as dramatic as at the start of the pandemic. Prices for lumber and steel are technically higher than in spring 2020. Yet, compared against the current value of the dollar, they are lower than they were when the pandemic began. “This is remarkable because a lot of manufacturers and suppliers shut down during the pandemic. Plants for finished products like cabinets also closed. A percentage of businesses and facilities never reopened. Given these concerns, it is fortunate that builders have been able to find materials and supplies to continue work,” says Tony Simmons, owner and president of Nordby Construction in Santa Rosa. In response to rising costs, some North Bay property owners have reduced the scale of projects. For example, a number of wineries decreased the size of new tasting rooms. This was also because wineries saw direct-to-consumer sales increase early in the COVID-19 pandemic. Other property owners are proceeding ahead with their original plans. “If you want a new space like a wine cave to increase storage capacity and guest visits, it’s a gamble to wait for interest rates to drop. Next year you could miss out on gains,” says Simmons. Starts set to rise, but home renovation is ongoing In 2024, nationally, construction starts are expected to increase 7%, with a $1.2 trillion forecast, according to the Dodge Construction Network (DCN). DCN is a Massachusetts-based company that offers predictions about the commercial construction industry.
Spending on nonresidential building is expected to be lower overall, with only a 4% increase, according to the American Institute of Architecture. This means many of the starts will be in housing. Locally, there is still great demand for renovation, says Dan Weaver, vice president of sales for Healdsburg Lumber Company. “With interest rates high, homeowners can’t change residences easily. So many locals are fixing up their homes. The numbers aren’t as big as they were early on in the pandemic. Homeowners still want to make their yards and decks ‘private paradises.’ They’re also remodeling kitchens and bathrooms,” says Weaver. Another trend is to expand living rooms, as well as upgrade the “pretty parts” of homes, like cabinets, windows and trim, says Chris Gaylor, contractor sales manager for Healdsburg Lumber Company. “We’re in a bubble in Sonoma County, especially in affluent areas like Healdsburg. Many newcomers are arriving from other parts of the Bay Area and the East Coast. The houses they are buying tend to be older. They require new siding and wood replaced due to dry rot or water damage. Also, rural homes tend to need more repairs. This is more common after heavy winter and spring rains,” says Gaylor. Letitia Hanke is the owner of ARS Roofing, a Santa Rosa- based roofing company. She says the 2023 fall and winter storms caused so much damage North Bay residents had to prioritize roof repairs and tree removal. Such decisions meant putting other improvements on hold. Some property owners’ lag to renovate is also related to the demand and cost for roofing materials. The 2023 storms affected most populated areas of California. Roofers, builders and developers have seen roofing materials costs increase every few months.
Labor concerns increase total costs In January 2024, the minimum wage for all California workers
April 2024
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