To locals, North Lake Tahoe is known for the low inventory of affordable housing options — to buy or rent.
Amid massive local job loss in the region’s biggest industry — tourism — Bay Area vacationers turned their second homes into primary residences. Those who opted to build their dream home from the ground up were unabated by high construction costs as well, because of the higher incomes of Truckee’s new residents.
Daniel Swartzendruber, of Tru-Line Construction, works in Grass Valley and Truckee, and said although Truckee and Grass Valley are similar, different socioeconomic classes dominate.
“Their market has always been very different,” Swartzendruber said of construction work in the North Lake Tahoe region. “Those are expensive houses.”
As of July, Swartzendruber said he was involved in multiple ongoing projects in the North Lake Tahoe region that endured changing cost estimates based off serious changes in the price of materials.
“We’re still building during COVID because people can work remotely,” Swartzendruber said of the availability of funds for home projects. “They bought houses — a lot of them second homes.”
Matthew Sutherlin, president of Grass Valley-based Green Bee Construction Inc., said he has heard of lumber costs as having increased 125% since summer 2020. Even with the increased overhead cost, Sutherlin has remained busy over the past year with the help of a customer base he estimates is made up of over 90% of Bay Area transplants.
Sutherlin said he is grateful that the industry he works in is doing well, especially in a time of unprecedented economic uncertainty, though he’s not making more per project than he was pre-COVID-19.
“There’s no shortage of work,” Sutherlin said. “In that respect, we’re making as much money.”
Steve Piziali, a builder and president of the Nevada County Contractors’ Association, said the price of wood was at least 100% higher than the prior year, adding that metal, plumbing fixtures and appliances have also increased in both cost and scarcity.
“Everything has gone up,” Piziali said.
On top of the materials, people power is also limited, Piziali said.
“There’s a labor shortage, so labor costs have gone up,” Piziali said. “We have to pay more to retain our employees — it’s not material costs only.”
Piziali said he’s been in the building business 31 years and the demand is the highest he’s ever seen.
To Sutherlin, the high construction costs are unfortunate for those seeking affordable home ownership by building ground up, but are also inevitable given the fluxing relationship between supply and demand.
“Demand is higher than manufacturers can keep up with,” Sutherlin said. “With demand high and supply low, the automatic result is prices go up.”
Lumber mills and wood product manufacturers responsible for processing timber into materials, like plywood, beams and 2-by-4s, are the ones walking away with the cash, Sutherlin said.
According to an employee in a Weyerhaeuser distribution warehouse in California, the demand for timber peaked once prices hit a ceiling in April.
An employee at Truckee Tahoe Lumber company said prices remain 20% higher than they were pre-COVID-19, but according to the Weyerhaeuser employee, the prices should return to normal once retailers overturn their current inventory — in about six months.
Green Bee’s Sutherlin believes that those who thought they might catch a break from California’s ever ascending real estate costs by buying land and building their own home are in for a surprise.
“It’s no longer cost effective to build a new home,” Sutherlin said. “It’s pretty much going to cost more to build a home than it’s worth, in most cases.”
Sutherlin said projects continue for those who have no money issues.
“They are OK with coming in underwater — so to speak — on the other side of their building project,” Sutherlin explained. “For other people unable to buy a house in the first place, it’s just not happening.”
Sutherlin said since the beginning of the pandemic-related quarantine, he witnessed a marked increase in demand for building and remodeling services.
“People trying to convert their garages into apartments and so forth,” Sutherlin said, attributing the sudden interest in home projects to people spending more time in their home. “They’re making adjustments for home/work use, and also, because they’re at home all the time looking at their kitchen, they think, ‘Boy, I would like to have a new kitchen.’”
Rebecca O’Neil is a staff writer with the Sierra Sun and The Union. This story first published Sept. 24 and is republished here with permission.
