Builders get squeezed as costs rise, contracts don’t | San Francisco Business Times
In the construction business, it remains a buyers’ market in the Bay Area.
The cost of building materials and labor have nudged up recently, but contractors are keeping their prices low, meaning deals for buyers.
Construction costs have come down 20 percent, by some estimates, since their peak in 2008. The price drop was due mostly to the recession dragging down prices for everything from concrete to copper. Meanwhile, the tight lending environment meant many building projects were delayed or killed, forcing general contractors to drop bid prices to win what little work they could.
Some builders are submitting bids to eke out a 2 percent profit, said Glenn Isaacson, CEO of Conversion Management Associates, a real estate consulting firm in San Francisco. That is down from boom times when general contractors might earn a 15 percent to 20 percent profit.