A ‘double whammy’: Kentuckians rebuilding from disaster face inflated construction costs
The rising cost of construction supplies has done no favors for Kentuckians working to rebuild from a pair of devastating natural disasters that hit the state less than a year apart.
The cost of the construction materials needed to rebuild homes following last summer’s deadly flooding in Eastern Kentucky has “almost doubled,” said Jamey Fields, the current president of the Kentucky River Home Builders Association, a trade association which covers the four counties that bore the worst of the July flooding.
That cost increase didn’t start with the flood, but has been ongoing since the onset of the COVID-19 pandemic in 2020. Other global impacts, like Russia’s invasion of Ukraine last year, drove the price of necessary materials like aluminum to record highs.
Construction costs were forecast to increase by 14.1% by the end of 2022, well above the historical average gain of 2 to 4%, CBRE, a commercial real estate and investment firm, said in a report last year. That follows an 11.5% rise in 2021.
Near Bremen — a small community in Western Kentucky which lost 11 residents to the December 2021 tornadoes — families rebuilding their decades-old homes found that their properties were underinsured for the disaster, forcing them to go into debt to fund the much more expensive construction of their new homes.
“Everything’s gone through the roof,” said Dwight Harlan, who is hoping to move into his rebuilt home this summer, about the price of construction. “They say that lumber (price) is coming down. Well, we’re past the lumber fight, we’re into the stuff that goes with it and that stuff hasn’t come down. HVAC systems and cabinets and drywall.”
The cost of Oriented Strand Board or OSB, a type of engineered wood that is commonly used in building construction, has also rapidly increased in price. Between the beginning of 2020 and mid 2021, the cost of the board increased 510%, a report from the National Association of Home Builders showed. According to the association, OSB accounted for nearly two-thirds of the wood panels used in wall sheathing on new construction in 2019.
“It’s way up there,” Harlan said of OSB prices. “When you try to do it right, everyone’s like, ‘Well, why do you have to spend so much on this or that?’ Well, you don’t want to put substandard stuff in there.”
In Hazard, Fields owns Perry Vinyl Windows and Doors, which sells many of the products which make up the exterior of homes like vinyl siding, windows and metal roofing. He also owns a construction company that installs those products. Since the pandemic, Fields has seen more demand for his company’s services than he has workers for.
With demand that high, “the cost is gonna go up along with the inflation of materials,” Fields said.
“For a storm victim,” he said, “it’s a double whammy.”
Last July’s flooding killed 44 people across multiple southeastern Kentucky counties and a recent report from the Ohio River Valley Institute estimated that 8,940 homes in 13 counties experienced some level of damage. Over half of those homes had major damage and another 542 were destroyed.
With the high cost of construction material, some rebuilding flood victims are finding that they “just can’t afford it,” Fields said.
Prior to the flood, July 2022 was looking to be one of his slowest months of the year, Fields said, but after the disaster struck nearly all of his products went into high demand, “immediately,” and hasn’t really slowed down.
Continued severe weather events has also brought demand spikes, Fields said, noting that the thunderstorms and damaging winds that swept over the Commonwealth last week left his business “slammed.”
This story was originally published March 9, 2023 at 10:00 AM.