The local Habitat for Humanity affiliate, like others in the organization across the country, says it’s struggling with the effects of the COVID-19 pandemic, especially in terms of soaring material costs and fewer volunteers.
Nancy Pellegrini, director of the Menominee River Habitat for Humanity in Kingsford, estimated prices for some materials reached as much as 500% higher than a year ago. A 2-by-4 board that had cost about $2 now is up to about $10, she said.
While prices have come down in recent weeks — by about 40% nationwide since the beginning of June — Menominee River Habitat volunteer Brian Clark said they remain significantly higher than before the pandemic.
“You never know, but it might be Christmas before we see the prices down,” Clark said.
Clark, affectionately know as “the ramp guy,” is one of group’s three remaining core volunteers from a crew that at full strength numbered about 12.
“For some volunteers, if they are not kept active they don’t come back,” Pellegrini said.
They normally build one house every one to 1 1/2 years, but the last house, their 50th, was delayed. Now, the cost of building that home is up about 30 to 40%, primarily due to lumber and oriented strand board.
They also repair about 20 to 25 homes a year, mostly roofs, but also building ramps and installing windows and siding.
“Because people were stuck at home, they noticed more things wrong with their homes. There have been more requests for repairs,” Pellegrini said.
“When people want repairs done, we tell them that the price is high right now. We ask them if they want to wait or pay the higher price of repairs. Families are choosing to wait unless it’s a critical need.”
When they did replace a roof on a mobile home, the final cost ended up being $9,800, compared with an original estimate of $6,500.
Friday, they installed a ramp on a home in Breen Township for Howard Carlson, a World War II veteran who was celebrating his 96th birthday.
“That’s going to be nice, boy,” Carlson said of the ramp as the crew worked outside. He relies on a motorized scooter to get around his home.
Clark said he wanted to put this ramp project off for a while because of costs but luckily had most of the materials on hand. Parts of the ramps were pre-constructed and funded by volunteers from Systems Control, with one, Tom Chouinard, turning out at Friday’s build as well.
Clark said when they went to buy additional lumber, “it cost more to do the handrails than it did for the entire ramp.”
The local Habitat ReStore in Kingsford had to shut down for several months as well. They also had to close their ReStore site in Iron River because of damage to the building; that move ended up being permanent.
“It was an odd funding year. We couldn’t apply for grants for projects because we couldn’t do the projects,” Pellegrini said.
Overall funding was down last year, but recently three donors have stepped up with contributions.
Habitat for Humanity leaders nationwide said they’re grappling with the same problems.
The past year has felt like one punch after the other, they say. First hit: Habitat’s local affiliates had to limit volunteers over virus concerns, forcing them to fork over more money to hire contractors. Second hit: Revenue was dented by temporary closures of ReStores, the reuse stores operated by local Habitat organizations. The third: Construction delays caused by pandemic-induced kinks in the supply chain, which make affiliates wait longer for supplies.
What could have been the knockout blow was the spike in construction costs. Lumber prices, according to the National Association of Home Builders, increased by more than 300% since April 2020. Demand for new homes, as well as demand for supplies for renovation projects and other factors, also kept costs high, experts say. Prices have come down in recent weeks but are still significantly higher than before the pandemic.
Morgan Pfaff, the executive director of Habitat for Humanity of Wisconsin River Area, which operates in rural Baraboo, Wis., said the group had to cancel the second house it was going to build this year because it just can’t afford it. The one house they are building is costing more because it doesn’t have enough volunteers. “It’s going to be, at least, an additional $13,000 of contracted labor that we hadn’t budgeted for,” Pfaff said. “Then you add in the cost of materials, and it’s really upside down.”
Faced with challenges on all sides, Habitat’s network of independent, locally run affiliates are trying to cope with increased costs by taking out loans, increasing fundraising and using alternative construction materials, among other things. Some affiliates are using materials local stores helped them stockpile before the price hikes went into effect. Now, in the midst of the surges, officials say donors are also stepping up.
In each of the past three years, the nonprofit has built an average of 3,000 new homes in the U.S. It continues to be one of the top affordable homebuilders in the country, despite a 4% drop so far this year compared to 2019, according to Adrienne Goolsby, senior vice president of U.S. and Canada at Habitat for Humanity International. However, experts say its work — and the work of other housing nonprofits — can’t solve the shortage of nearly 7 million affordable homes in America alone.
Habitat received about $1.5 billion in contributions and other in-kind gifts throughout its network, according to the organization’s annual report for fiscal year 2019, which shows the latest figures without the impact of the pandemic. Those gifts, coupled with federal grants, help affiliates subsidize mortgages for Habitat homes, which families build alongside volunteers and pay off through a no-interest mortgage that cannot exceed 30% of the homeowners’ monthly income.
“One of the challenges facing Habitat is that a lot of affiliates are working with families who were previously approved for a finance package that did not account for these increased costs,” said Nancy Lee, the executive director of Habitat for Humanity South Carolina, which oversees 29 local affiliates in the state.
“As the cost to build increases, we’re seeing a lot of affiliates absorbing that financial burden themselves,” she added. “That is not a sustainable approach, and the ramifications we’re seeing in South Carolina include affiliates having to consider either slowing down anticipated build schedules and/or finding alternative ways to overcome the price increases, if this situation persists.”
Another reason Habitat homes are affordable is because the affiliates get materials for free or at a low-cost from Habitat for Humanity International’s corporate partners. But, the affiliates still have to make purchases at a market rate. Burdened by the recent cost spikes, some are now focusing more on home repairs instead of new construction, said Goolsby.
“Our affiliates are quite innovative as well, some of them are using substitute materials where it’s allowed,” Goolsby said. For example, instead of using wood-based exterior sheathing for homes, some are considering a shift to rigid board…