What I’m about to share might come as a surprise to you and may be tough to read: In today’s market, building a log or timber home—or any home for that matter—isn’t an inexpensive proposition, and that’s not likely to change any time soon. But as a builder in the field, I want you to understand why.
Let’s start by being clear about one thing: Home renovation TV shows have created unrealistic cost expectations among real buyers. When these programs show you the price for materials like cabinetry or flooring, more than likely it’s a wholesale cost, a price break that the builder gets for repeat business or they leave off key fees. For instance, they may provide a price for a slab of granite for a kitchen counter, but they neglect to include the cost for fabrication and installation, which typically is as much or more than the cost of the material itself. So if the cost of a slab of granite is broadcast at $3,500 on the show, the cost to turn that stone into a countertop is actually double.
Another thing to keep in mind is that log and timber frame homes are about as custom as you can get in a place to live. The essential materials (e.g., logs, timbers, windows, doors, etc.) aren’t “off the shelf”—they’re fabricated for your specific project, which typically increases the price.
Tariffs and Other Material-Cost Factors
It’s easy to blame the rising costs of building materials on current tariff policies. And make no mistake—they are impacting this industry. But they’re nothing new. We’ve always had tariffs on imported materials like softwoods out of Canada and electronics from Asia.
From an economic standpoint, the idea of imposing tariffs was that they’d ignite U.S.-based manufacturers to increase production and decrease reliance on imported goods, making domestic-made materials more available and affordable. However, American manufacturers have not filled that void. Instead many have viewed this as a cost-control “pass” and have increased their prices to be in line with tariff-fueled costs of imported materials in an effort to boost profit margins without producing more goods. As such, costs have not come down and aren’t likely to do so unless the cost of imports decreases, tariffs are released or domestic production increases. It’s simple supply and demand.
Instead of placing all the blame on tariffs, we need to start with where these costs were pre-pandemic versus where they are today. Before the pandemic, that cost was a lot less—anywhere from 18 to 30 percent less depending on where you are geographically. People have been trying to analyze why that huge jump happened. In my opinion, there are two key reasons:
- The demand for housing increased. There was as shift from urban/apartment living to standalone housing that offered better social distancing. Also, as people were sequestered in their homes, the desire for dedicated offices, home gyms, theater rooms and such rose.
- Supply and demand drove prices up. A lot of the factories that manufacture building materials worldwide were either closed or had a significant reduction in force during the pandemic. As a result, there were fewer materials in the marketplace and the need for them (as referenced in point #1) made them more expensive.
Unfortunately those prices haven’t come down. Once they reached a certain elevation, they stayed there, and this not only applies to materials but to labor as well.
A Reduction in Labor
Since the early 2000s, the number of trade contractors has been on the decline. From 2006 to 2009, following the mortgage crisis, we saw a huge drop. Craftsmen and a host of trades like electricians and plumbers left the industry in droves—either retiring or changing careers—as the ability to get financing dwindled and the housing downturn emerged. The market rebounded in the mid-2010s, but the number of specialty tradespeople didn’t. U.S. Census Bureau data says the share of construction-industry workers under age 45 decreased from 73 percent in 2000 to 63 percent by 2011 and continued to decline because high school grads weren’t entering the building industry.
To further complicate matters, we experienced another decline in the trades at the end of the pandemic that continues today. Now with a tightened stance on immigration, the building industry continues to lose even more people. With all these factors, the construction labor market is down 40 to 50 percent from where it was 20 years ago.
This shortage of skilled tradespeople puts their services—especially the top-notch folks—in high demand. As a result, the prices they command for their services has increased permanently.
I’ll use an example in my market here in eastern Tennessee. Pre-pandemic, an electrician I’d used for years charged $3.25 per square foot to wire a house. Post-pandemic, that fee doubled to $6.50 per square foot. Yes, copper and other materials now cost more, but it’s not a 100 percent increase. Regardless of reason, $6.50 is his new benchmark and general contractors like me just have to accept that.
When you combine these factors, along with things like stricter energy codes that require a greater level of insulation, a superior tier of windows and other energy-efficient measures that carry higher price tags, you can begin to see why houses are costing more and more to build.
So What’s the Good News?
I don’t say any of this to dissuade you from building a log or timber home—quite the opposite actually. The fact is that the time to build is now. Don’t try to “wait out the economy” (which is slowly getting better) thinking that the price of materials and labor is going to go down. It’s not. Neither are pre-existing home prices. But the cost of money (i.e., interest rates) is going down, and this can present opportunities for you to finally make your dream of a tailor-made log or timber home a reality. And let us not forget that you’re not the only one with this dream, which means that as demand begins to rise, so too may costs.
My advice? There’s not going to be a better time than now to build the home you’ve always wanted. It’s time to go for it.
Dan Mitchell is a log and timber home builder and educator, as well as president of the Tennessee State Home Builders Association. He owns Eagle CDI, a construction firm based near Knoxville.
