Bay Area Construction Costs: Will The Market Cool?

For the price of a tree house in the Bay Area, one can buy a spacious house in the Midwest. So, will we all live in tree houses or will the market cool?

Something very strange is happening with the design and construction market. The inflation and the rising interest rates are not slowing it down. Since the beginning of the year, we keep waiting for changes in the market, but the only change that is happening is that our phone rings more often with new inquires. We hear from developers, homeowners and business owners. They are eager to start their project yesterday but can’t find architects or contractors.

We are not economists, but we have been in the profession for a while and know that the markets not only go up, but also down. We also know that everything is cyclical and there will surely be a cooldown, especially with the cost of money going up. It would be very surprising if the prices continue going up and not go down or at least slow.

We don’t know when, but we do know that you can save on construction if you wait for the market to cool. Our recommendation is to start the design and submit for permitting to be ready to build, but do not start construction until the contractors are less busy. Yes, you will pay for design at today’s rates - but remember that design is many times less expensive than the actual construction, and it’s likely that you will have significant savings in a slower construction market. Contractors inflate their prices and reject jobs right now. We would be very surprised if this does not change!

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