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Turning Rising Costs Into Rising Profits: The Contractor's Guide to Thriving During Construction Inflation
Manage episode 506672874 series 2911349
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Key Points from This Episode:
- Insurance industry insights reveal construction market trends - Insurance companies must predict industry futures to properly underwrite risks, making their forecasts valuable for contractors and property owners
- Persistent labor shortages will continue impacting construction - Licensed contractors can't be easily replaced, and fewer people are entering trades due to licensing requirements and preference for non-manual labor
- Driver shortages affecting material delivery costs - Too few qualified truck drivers combined with strict drug testing requirements (even in marijuana-legal states) will keep transportation costs high
- States attempting to ease contractor licensing requirements - Arkansas and other states are reviewing occupational licensing to get more people into the construction industry
- Inflation projections show continued price increases - Current inflation at 7.5% with forecasts reaching 8.5% or potentially 9%, meaning construction costs will compound annually
- Insurance companies forcing roof replacements - Homeowners with roofs older than 10-15 years face coverage loss or premium increases, creating urgent demand
- Strategic advantage for contractors: Present future pricing - Show customers current costs versus projected costs in 2, 5, and 7 years to motivate immediate action
- Quality and availability declining across industries - Customer service and workmanship quality dropping due to labor shortages, affecting construction industry
- New home construction prioritized over renovations - Contractors choosing new builds over remodels due to higher profits, leaving homeowners lower on priority lists
- Investment opportunity in immediate improvements - Completing roof, septic, and other major improvements now provides automatic 8% return by avoiding future inflation
- Housing demand creating contractor scarcity - Need for 5 million new homes will pull contractors away from renovation work
- Time-sensitive decision making crucial - Acting now on necessary improvements saves money, ensures better quality work, and avoids insurance complications
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