NEWS RELEASE - July 23, 2004

Building Costs are UP across the board!

The National Association of Home Builders (NAHB) reports that prices for softwoods used most often in building have climbed 58 percent in the last year. Plywood prices are up by 100 percent, and OSB (structural engineered wood panels) by 158 percent. “We first saw what was happening last fall, when plywood prices doubled in some cases,” says Fausto Martin, Safeco National Director of Property Claims. Because plywood or OSB is used everywhere from roof sheeting to
sub-floors, even a small price increase can affect overall building costs. Steel costs more today as well. USA Today reported steel prices have risen 40 to 60 percent in recent months, while Bloomberg News reported the cost of imported iron and steel had increased by 35.8 percent from last year. NAHB statistics show the price of scrap steel is up 100 percent from last year, affecting everything from steel studs to rebar to nails.

Copper prices have gone up 22 percent since November, according to MSNBC. Prices for cement and concrete have risen and are expected to spike significantly. Rising fuel prices are accompanied by price hikes for other petroleum-based products such as plastic piping, drywall and insulation. Even labor costs have gone up. U.S. Labor Department figures show the hourly earnings of construction workers averaged $19.19 in March, up 2 percent from a year ago.

China continues to buy up raw building materials from all parts of the world to feed its booming urban real estate market and tremendous demand for cars, bridges, dams, factories, and skyscrapers. China uses more than one-third of the world's supply of steel and cement and is the world's biggest importer of steel mill products. In 2003 China’s steel demand equaled one-third of the U.S. annual capacity.

Rising steel prices also drive up the cost of lumber as builders turn from steel studs to wood studs.

There are fewer lumber mills. In 1987, 702 mills operated in the Pacific Northwest, compared to 200 today. Only three plants in North America make OSB.

There is a shortage of rail cars to ship lumber in, and that means using truck transport, which is affected by the soaring cost of petroleum. Higher petroleum prices also result in higher costs for related products such as asphalt shingles and PVC pipe.

Snapshots from around the country

Dayton, Ohio
A single sheet of composite structural wood that cost $8.45 last spring is now $19.52

Portland, Oregon
Plywood jumped from $275 per 1000 square feet to $444 in the last year

Albuquerque, New Mexico
OSB selling for $200 per 1000 square feet rose to $540 in 12 months

Nashville, Tennessee
A 4 x 8 sheet of OSB has gone from $5.63 to $16.00

Missoula, Montana
OSB has gone from $6 a sheet to $22

Syracuse, New York
Plywood prices are up 130 percent

Dover, Delaware
OSB has gone from $7.50 to $19 a sheet

Tyler, Texas
Price of nails is up 50 percent

Gulfport, Mississippi
A roll of wire mesh has gone from $32.92 to $68.00

Detroit, Michigan
Price for a 6-inch 16-gauge piece of galvanized steel rose from 65 cents to $1.05

Las Vegas, Nevada
Concrete prices have risen from mid-$60s a ton to the mid-$80s since the first of the year

Biloxi, Mississippi
Cement prices jumped from $50 per yard to $75

Reprinted with Permission of Safeco Insurance

This news release is brought to you by the commitment and assurance of the A.D. Dern Insurance Agency, Inc., keeping you up to date and aware of the ever changing California Insurance market place. Continue to check back with us for other insurance articles of interest.

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