Marshall Fire survivors face high costs, supply shortages as they look to rebuild
Experts say developers who take on multiple homes could ease process
Aboard a Colorado National Guard helicopter, Gov. Jared Polis on Friday, Dec. 31, 2021, gets a flyover tour of Boulder County neighborhoods destroyed by wildfires the previous day. (Hart Van Denburg/CPR, pool)
The Marshall Fire destroyed close to 1,100 homes across Louisville, Superior and unincorporated Boulder County on Dec. 30, fueled by dry conditions and high winds in a suburban area typically safe from intensifying wildfires.
That damage includes entire neighborhoods and subdivisions, such as the Sagamore neighborhood in Superior, and could be a residential loss upward of $500 million, according to county officials.
It is the most destructive fire in Colorado history, and presents a unique challenge to survivors: how to rebuild on a staggering scale hardly seen before.
Labor and material shortages
The devastation came amid a pandemic and global supply chain crisis that has exacerbated shortages of both labor and materials, creating an obvious hurdle to rebuilding.
It is a challenge that builders are anticipating, even months out from breaking ground on new homes.
Jim Chanin, founder of the Boulder-based Chanin Development, said he has already met with his lumber supplier in hopes of having enough material when the time comes. It will take negotiations up the supply chain to have the right product at the right time.
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“We’ve had a legitimate disaster here, and we need (suppliers) to bump our allotment north so that we can supply the materials for these people to rebuild our homes. I’m trying to think as far out on the horizon as I can in relation to material,” he said. “I’m doing the same thing with labor as well, trying to make sure all of my people are ready when we’re in the ground and getting after it.”
Chanin’s experience is in single-family, residential development, and he said he is already working with approximately 15 families who lost their homes, but the phones are “ringing constantly.”
Another challenge to rebuilding will be the sheer cost. Louisville chief building official Chad Root said during a Jan. 11 meeting that people could expect to pay approximately $320 per square foot for an “average” home. This falls much higher than the national average, which hovers around $150 per square foot, according to HomeAdvisor.
“That’s just with lumber prices and cost in general at this point,” he said.
Even then, that estimate could be low. Chanin said he is advising insurance companies for his clients a “conservative” number of $400 per square foot, an effort to shoot high and prepare for any more outside influences that could raise prices.
“When you consider the cost of building materials — lumber in particular — the scarcity of building materials and the increase in demand, all of these things conspire to make it a very difficult environment to build in.”
The supply and cost problems are not only in lumber, but also other building materials and finishing touches like windows and garage doors.
Jeff Hindman, the founder and CEO of Cottonwood Custom Builders, said he is currently finishing a custom remodel and figuring out a way for the owners to move in without the backordered windows. It’s impossible to predict market conditions when Marshall Fire survivors are ready to rebuild and move back in.
“I don’t see the fire as making the construction materials market worse,” Hindman said. “It’s just that this is the market we have and we have to try to rebuild in this market. It’s not only more expensive, but much more difficult.”
He said that a sheet of oriented strand board, one of the bread and butter materials for sheathing, costs approximately $55 right now, compared to just $15 before the pandemic.
An opportunity for larger development projects
City officials and experts are also advising survivors who want to rebuild to consider teaming up with the same developer and contractor, arguing that it will make the process smoother and potentially more affordable.
“As your building official, I would highly recommend you get with your neighbors and talk with them as far as what they’re doing and the contractor they’re using to rebuild their home, if they have somebody,” Root said. “This is where it’s going to be the cost savings and it’s going to be a lot easier.”
A coordinated effort like that, he said, would reduce the “chaos” of staging materials and organizing vehicle access. If tradespeople could systematically go from house to house to do things like pour concrete, build frameworks and install plumbing, it could expedite the process and ensure all the houses are completed around the same time.
Additionally, it would allow contractors to bulk-buy materials and pass the savings to the homeowners.
“It’s just economies of scale for labor and materials,” explained Ron Throupe, an associate professor in the University of Denver’s construction management program.
Chanin said he is potentially working with a group of neighbors to build 11 or 12 houses on a single street, in that type of strategy that Root recommended.
Throupe said that in discussing Marshall Fire rebuilding, he has heard of plans for a group of investors to bulk buy lots from survivors who don’t want to rebuild and then develop the land.
“It’s very early, but there’s people looking at that possibility,” he said.
“It’s a slow grind, and it becomes a lot of time and supervision out of that planning office to look at each project separately. They could have a lot more coordination by having a home builder of some size doing however many homes.”
It could be a way out for people who want to move away from Boulder County instead of rebuilding.
“From an insurance standpoint, you don’t get paid for the lot. That’s considered indestructible. So if homeowners can put their lot price at something reasonable, that’s cash. And then you get a cash-out from the insurance company. That can be a pretty big incentive to move on,” Throupe said.
Chanin said he also heard anecdotes of “predatory” developers from other states coming in to take advantage of the opportunity to build entire new neighborhoods.
“They are contacting these owners from out of state, just scouring the landscape looking for opportunities like this,” he said.
He said that he would rather have builders from the community who know the market to do the work. Not only do they know the area and local contractors better, but they also can be held accountable.
“I do know it’s happening,” he said of the outsider builders. “It’s why I’m trying to be as aggressive as I can to get out there. I want to help as many of these people as I possibly can.”
The Home Builders Association of Denver put together a resource page for homeowners navigating the contractor hiring process. The cities of Louisville and Superior also have their own informational pages for rebuilding.
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