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Supply chain issues trickle down to homebuyers

Prices, timelines for new builds jump in recent months
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Posted at 4:12 PM, Jan 11, 2022

CLEVELAND — Despite the below-freezing weather, work was still happening on a series of townhomes going up south of Crocker Park in Westlake.

"We're actually going to start listing the two that we have over here," said Ed Pavicic. "One's our model here in about two weeks."

Pavicic's family business is building, and the townhomes are one of several construction projects he's overseeing. He knows first-hand the impact the pandemic has had on the industry.

"We have to plan way ahead now," he said. 

The last two years saw an explosion in the housing market and now deeply felt impacts of broken links in the supply chain. Pavicic is watching lumber prices go back up and housing staples like garage doors are harder to access.  

"In the past, you could order garage doors and get them in about five or six weeks," he said. Now he's ordering garage doors months before projects start. 

With longer timelines, costs go up and some of that is passed on to the consumer. Pavicic wants to get people into affordable homes but "homes that were $380,000 are now $520,000." 

That increase is the opposite of what people like Pavicic and industry experts want. 

"I mean, the ultimate goal is to drive down the cost," said Dr. Jay Chen, an associate professor in operations and supply chain management at Cleveland State University. He knows exactly how things around the world should run and what is happening now that issues are being felt on a large scale. 

"Sometimes we just have to be compromising with what we have," Chen said.

For buildings like Pavicic who work with clients who want homes that reflect their style, compromise isn't always in the equation. His customers are willing to wait and pay more for what they want. He knows it won't and can't last forever. He is waiting for a market correction but "I hope we don't have a correction or it's going to cause problems for the housing industry.He said what happened in 2007 and 2008 can't happen again.

Pavicic also looks at labor issues as part of why home builds are taking longer and costing more. Right now he has open positions for project managers and carpenters.