COLORADO SPRINGS — News 5 Investigates has learned that dozens of Colorado Springs families are closing new homes that aren’t finished when they move in.
The supply chain shortage during the pandemic is leaving owners frustrated and wanting answers. Meanwhile, homebuilders say they’re doing their best to keep their customers happy.
Johnny Lanigan closed his Colorado Springs home last year. When we spoke to him a few weeks ago, he was expecting dozens of cabinets for his kitchen and bathrooms.
“My biggest beef is there’s no answer,” he told KOAA. “There is no direct date for when my cabinets will be here. It has been four and a half months.”
Johnny says he closed his house and signed the final walkthrough thinking the materials would arrive in a few weeks. Unfortunately, the weeks turned into months.
“The only answer I get is that they will show up when they show up.”
Classic Homes president Joe Loidolt says he is well aware of Johnny’s issues and says as of March 2022 there were around 80 homes missing.
“I speak with the cabinet company regularly,” he said. “We tried everything to get cabinet doors here. At the end of the day, if they don’t have cabinet doors, they can’t send them. At one point, they were 13,000 doors short across the country and it’s not just a local problem it’s a national problem It’s not just this cabinetry company We’ve looked at other cabinetry companies thinking we’ll just changing companies, they’re all in the same boat.
Loidolt says he understands Johnny’s frustrations and says his company is doing everything it can to provide updates to Johnny and other owners as shipments of out-of-stock parts arrive.
“We had no idea these cabinet pieces were going to be missing when we sold these homes which closed in the fall of 2021,” Loidolt explained.
Loidolt says all of its customers will be taken care of accordingly.
He adds that Classic Homes is the largest home builder in El Paso County, producing 600 to 700 new homes each year.
He says customer satisfaction is important, and like other businesses, they are feeling the heat.
“We have a lot of shortages,” he said. “We have some appliances that we don’t seem to be getting in time. We have some garage doors that we don’t seem to be opening in time. So we’re trying to find enough parts and pieces to get the houses to the finish line and the homes we sell today, we tell our customers that we don’t know what we might be missing when your home closes because it’s 7 or 8 months from now.
Johnny says he’s not looking for conflict. He just wants to warn potential buyers in this market to exercise caution when closing on an unfinished home.
“I’m not here to harm the business,” he said. “I just want my cabinets. We love our house. I think Classic is a reputable company and I would buy yet another house, but I would never buy a house that isn’t finished.
According to Realtor.com, most closing dates are open for negotiation. Some are not, so you will need to read your contract carefully.
Also, it is important to document (in writing) any problems or missing parts in your home during your final inspection.
As of this week, Johnny says the majority of his cabinets have arrived and been installed. He is still waiting for some cabinet door frames which he hopes will arrive soon.
Classic Homes reassured us, all owners will be scheduled for installation appointments as soon as the parts arrive.
News 5 has reached out to several other builders for information about the supply chain shortage.
Response from Covington Homes:
As of March 2022, supply chain issues have not improved. In fact, they have deteriorated a bit.
Delivery times are longer for everything from stone to garage doors to windows.
Supply chain issues began in February 2021 and have continued to escalate.
At the start of the supply chain crisis, I started tracking the following:
-Materials that were short
-Materials that were no longer available
-Materials that increased delivery times
-Materials that are on allowances
-Materials whose costs have increased due to supply chain issues and inflation
This list (at the time I stopped following) had over 150 items. I stopped following the list around September 2021 as the supply chain issues were not improving and instead the list continued to grow.
Rather than increasing production of many of these materials, many manufacturers have reduced production and/or production has remained at the same levels as before the large increase in orders and supply chain disruptions . The lack of increased production (caused by multiple factors) has exacerbated the shortages.
The supply chain issue (combined with the already existing labor shortage) resulted in longer construction times for our company. And the industry as a whole.
Our average build time has increased by over 3 months. We had to remove a lot of options and offers from our product, we changed the specifications of what we include in our homes we build, we asked our buyers to re-select a product not available on market for a product that is available, we have had to increase the prices of the houses we build by more than 30% due to increased costs, and we have sometimes had to close houses missing a few out-of-stock items. Overall, Covington Homes is doing well with being able to close homes with no missing items, but it’s my understanding that depending on which manufacturers builders choose to specify in their product, items are missing at the time of closing because they are simply not available.
Here are some examples of the challenges we are facing (that we have been facing since the beginning of 2021) with the Supply Chain:
Electrical transformers. Currently, there is a national shortage of processors. What does that mean? Lot development is delayed, therefore builders are faced with the impossibility of building more homes until this issue is resolved. This will exacerbate our already tight housing supply, driving up housing costs.
Engineered Wood Products – these have skyrocketed in price and have been put on allocations meaning we only receive a certain number of these materials per week.
Lumber. Its price skyrocketed and didn’t drop much at all. It is also put on allowances in some cases. The devices are still not readily available (since we all have to compete with Lowes and Home Depot for our orders) and they take up to 10 weeks to arrive.
-Garage doors still have a lead time of 12 to 16 weeks.
– Windows have a lead time of 16 to 30 weeks.
-Stone is 12 weeks lead time.
-Cabinets have a lead time of 8 to 14 weeks.
-Exterior doors have a lead time of 12 to 14 weeks.
-In addition, there is a long list of specialty items with delivery times of 3-6 months.
– Shipping costs have skyrocketed.
-Fuel is at historic highs and fuel surcharges are now being passed on daily.
Suppliers are not honoring their contracts with their distributors (the small businesses through which the industry buys products), resulting in a loss of working capital for these businesses as well as losses for the manufacturers’ balance sheets.
These are just a few of the issues we face in this industry.
Response from the Housing and Building Association of Colorado Springs:
The supply chain is always an issue, not to mention having enough skilled labor to build the house. An average house requires between 50 and 70 trading partners. The number of skilled trades depends on the complexity of the house. Here are the immediate supply chain issues:
These are considered elements of the “critical path” – without these elements, the project stops until the product arrives
- Floor joists
- Windows and mosquito nets
- garage doors
- Entrance doors
- cabinets from some manufacturers
Additional elements that can block the construction of a house, probably not stop;
- OSB (oriented strand board)
- Some plinth profiles
- AC units – according to manufacturers
- Countertops and tiles are inconsistent for availability
- Paint and primer
- Color pigment for stucco
- Certain bathtubs and shower trays
- Padlock with key
- Outdoor main circuit breaker enclosures (new code requirement)
- 2-pole GFCI circuit breakers (new code requirement for clothes dryers)
Below are examples of materials and items currently affected by supply chain issues for the development side of home building.
- Materials of water main (pipe)
- Water connection materials (copper, hdpe)
- Three-phase transformers
- Self-healing wire (service side) for electric meter (coming from the trench towards the riser).
Like many industries, there is a lot of volatility right now and for the foreseeable future.
Do you have a story idea for News 5 Investigates? We’re listening ! Email us: News5Investigates@KOAA.com