Yes, I wonder how much construction costs will decline as builders and subcontractors have to try to get work. Having just finished building a house in San Diego, I noticed several factors which affect prices:
1. Workers’ comp. Many subs told me they pay $33 for every $100 in wages. That is a 33% tax on wages! Crews with illegals don’t have that markup, but if they’re hard workers, they get paid about $25/hr anyway.
2. Competition. Although the contractors are busy and can leave you waiting for weeks to work on your job, so many people have entered this business, that the competition puts a damper on prices. OTOH, they all can charge more, because everyone is busy. Once, I called every backhoe operator in the Yellow Pages. Each did not call back, or said they were booked for 2 -3 weeks at least. The only guy I could find was someone who worked for a local utility, and did the work on the side, with a backhoe we had to rent.
3. Material costs. I’m not sure about this component. Perhaps someone else knows how much lumber, concrete, drywall, appliances etc. have gone up in the last few years. When we were in the Midwest last summer, in a city that had never heard of a housing bubble, we went to Home Depot and compared the price of some 2x4s, and a riding lawn mower to the prices at our SD Home Depot. The prices were the same. There is also a huge remodeling movement, so more high end stuff is desired for kitchens and flooring. So who buys a $50 sink when you can get the $600 stainless steel Franke. Who buys a $50 faucet when you can get the $475 Grohe pull-out LadyLux? Why get the $250 Costco dishwasher, when there is a super quiet Miele for $1600? Now they tell me that top-freezer refrigerators are “rental grade”. You’re supposed to spend at least $2000 for the bottom-drawer freezer, or get the side by side or built-ins for $5K. Perhaps the quality of components has improved. OTOH, granite is so popular now, it has come way down in price. It is no longer restricted to luxury homes. Consumers expect a higher grade of finishes and appliances. And the high end appliances are NOT made in China: they come from the good old U.S. and from Germany. (Perhaps they have manufacturing facilities in Asia?)
I was impressed with the professionalism of the contractors. I did see a pride in workmanship and concern for pleasing the customer.
So I think construction costs in CA are higher because of the 33% workers comp tax on wages, held down by all the competition and raised by the scarcity of workers, and raised by the more expensive materials people put into their homes.
