Construction costs rising

Katrina impact is real

As we approach prime tourist season, those considering building a new home in SW Florida are in for a surprise. The effects of Hurricane Katrina are already impacting raw material costs and are being passed on to new home buyers.

In the days following Hurricane Katrina's assault on the Gulf Coast, the price of plywood rose 50 percent.

Add to that the wrinkle of petroleum driving up the cost of everything from plastic pipes (a 45 percent increase) to truckers' diesel (up 50 percent from a year ago), and economists are saying the price of a new home will rise by as much as 10 percent during the next year, barring any other factors..

A big issue impacting new home contracts is the use of escalation clauses by builders. Since many potential new home buyers are scared off by these type of clauses, builders are forced to anticipate future costs that may be up to a year away.

If you are considering building a new home, committing as soon as possible is probably a wise move as the future cost structure appears to be rapidly moving upward.

Katrina raises local building costs [Herald-Tribune]

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