Operations Manager, Level Homes
The threat of price increases continues to be a constant topic of conversation and something we fight off daily. It has taken a lot of consistent effort and focus to maintain margins where they are today. I wouldn’t say margins are improving, but we’ve worked hard to keep them stable despite ongoing pressure from labor, materials, insurance and overall operating costs.
SVP Regional Manager, JD Bank
In the commercial space, project lifecycles are naturally longer. An average commercial construction project is at least 12 months. With a sizable project, you can expect 24 to 36 months for completion and stabilization. In considering the pressure of construction costs, we focus on the quality of the borrower and the borrower’s expertise in their industry, critical relationships that can impact the project, and understand their ability to leverage those relationships to get to the finish line. In best-case scenarios, I have witnessed phenomenal borrowers who deliver exceptional projects at the end of construction. One of my personal favorite conversations was with a borrower who recently told me, “My two favorite things have happened—we are under budget and ahead of schedule.” It’s rare, but that outcome is the result of a team of great, qualified borrowers who are top in their industry, have teams who work together like a well-oiled engine, and have great relationships in their field. Character plays a role in every credit scenario. On the less fortunate side, some borrowers building a new project can be their own greatest obstacle to reaching the finish line. I have seen difficult borrowers flip contractors mid-project and get too deeply involved in the day-to-day contractor details, putting an entire project at risk. A borrower who understands their role in a construction project, flexes properly when a challenge arises, plans for the unexpected, and has a positive reputation in the market will succeed.
Chief Executive Officer, Home Builders Association of Greater Baton Rouge
There’s a ripple effect. When the tariffs first hit, we’re all like, “Oh, here it comes.” People were sitting on inventory already, so we didn’t feel that immediately. But now we’re starting to see more of that inventory coming in at a higher price. Then we’re looking at the cost of fuel. What does it cost to bring it into the market? Looking at electronics, what are we getting from overseas? It just runs everything up. I had a builder tell me they were putting in a stove, and it went up $1,200. That’s not going to work. So, it’s definitely had a huge impact. Every $1,000 added to the price of a home in greater Baton Rouge means 536 more households that cannot qualify for the mortgage needed to purchase. That is 536 more first-time home buyers losing their chance to build equity and generational wealth. It’s that first-time home buyer that is just such a struggle.
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