Contractors in South Florida Experience 10% to 15% Cost Increase Due to Shortage

Construction costs in South Florida, specifically in Miami, have experienced an increase of about 10% to 15% in the last six months due to cement shortage, rising fuel costs, a hike in steel prices, and an
increase in overall demand.

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The cement shortage is attributable mainly to Titan America’s old plant being down due to constant breakdown of its equipment. However, a new $225 million cement plant in Medley, Florida, is scheduled to begin operations next month which should double its present production capacity and should ease cement delays. Concrete prices, however, are likely to rise about 25% to 35% in the next six months, driven by a statewide shortage of cement.

Additionally, the construction boom in China complicates the problem, since China alone is expected to consume nearly half of the global supply of cement this
year. Steel is being consumed by China at an unprecedented rate, causing its prices to rise about 50% within the last eight months. Also, rising gasoline and diesel prices will lead to a substantial increase in
transportation cost of building materials to job sites. Everything adds up, but at the end of the road, the consumer is the one that will absorb most of the cost increases.
Gontractors are cautioned to plan for this increase and should make provisions for expected delays due to heavy demands being place in construction. The combination of rising interest rates, delays in construction delivery and shortages of essential building materials may hamper
Florida construction industry’s growth.

U.S. Dept of Commerce Reports on New Residential Construction in April 2004

BUILDING PERMITS - Privately-owned housing units authorized by building permits in April were at a seasonally adjusted annual rate of 1,999,000, according to estimates reported by the U.S. Commerce Department’s Census Bureau. This is 1.2 percent above the revised March rate of 1,975,000 and is 11.2
percent above the April 2003 estimate of 1,798,000. Single-family authorizations in April were at a rate of 1,540,000; this is 0.7 percent below the March figure of 1,551,000. Authorizations of units in buildings with five units or more were at a rate of 354,000 in April.

HOUSING STARTS- Privately-owned housing starts in April were at a seasonally adjusted annual rate of 1,969,000. This is 2.1 percent below the revised March estimate of 2,011,000, but is 20.3 percent above the April 2003 rate of 1,637,000. Single-family housing starts in April 2004 were at a rate of 1,610,000; this is 0.6 percent below the March figure of 1,619,000. The April estimate for units in buildings with five units or more was 315,000.

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HOUSING COMPLETIONS - Privately-owned housing completions in April were at a seasonally adjusted annual rate of 1,943,000, according to estimates
released jointly today by the U.S. Census Bureau and the U.S. Department of Housing and Urban Development.
This is 8.9 percent above the revised March estimate of 1,784,000 and is 16.8 percent above the April 2003 rate of 1,664,000. Single-family housing completions in April 2004 were at a rate of 1,670,000; this is 11.9 percent above the March figure of 1,493,000. The April rate for units in buildings with five units or more was 255,000.