2 minute readA rose is a rose is a rose. Right?
A construction delay, by any other name, is a construction delay.
Fact is, though, that a construction delay – which in building’s operational environment today and for the foreseeable future is a given, no matter who you are and where you operate – can mean two entirely different things.
For throughput-reliant homebuilders – ones whose checkbooks, and cash draws, and viability as businesses, not to mention their personally-guaranteed access to construction finance – delays mean something different. Something existential.
Let’s unpack this, because we’re hearing from some of the privately held homebuilding operators that cashflow – the umbilical line to continued, regular ability to draw against construction and project finance instruments – is undergoing stress thanks to building cycle disruption, a pandemic-related underlying condition of real estate and construction in 2021.
Elongated construction start-to-completion cycles — a byproduct of delays due, these days, to a now well-noted array of supply chain bottlenecks and disruptions, randomly allocated critical-path materials and products, construction crew scheduling disconnects and spot shortages, permitting and inspection hold-ups at the municipal level – slow or stall the delivery of new homes to new homebuyers. In that sense, delays benefit no one. That’s because they net out to prolonged carrying costs for each house under construction, leaving builders on the hook for mounting expense, deferred revenue, and added risk of a canceled sale, to boot.
Instead, the latter third and fourth quarter look now as though they’ll be a thrash for survival, as construction delays, bubbly input prices, tricky lot replenishment, and, now, prospective buyers feeling less certain it’s the moment to buy all rearing their heads as challenges of the week.
It’s big-boy pants time, especially for privately-owned and capitalized operators. A dash for a stash of cash – for use when times get on surer footing – is on lots of builders’ minds right now.
