2020 presented unique challenges to churches along with the rest of the country, and many of those challenges will continue into this new year. While the restrictions placed on public gatherings and safety, and their impact on churches, have been widely covered, the pandemic’s impact on the economy, specifically building costs (including church building prices) may not be as well documented. It can be hard to generalize how church building is affected because we see a wide divergence in different parts of the country in terms of restrictions, labor force and material supply. However, there some big factors that will have a definite impact.

Inflation and New Challenges

Let’s begin by looking at the construction costs in America before 2020. They increased a little less than 5% in 2019, and over the last four-year period inflation has averaged around 5% per year. As for 2020, the pandemic makes determining good comparison numbers difficult, much like the challenge most churches would have trying to compare attendance in 2019 with 2020. The national average has been reported to have regressed about ½% in 2020, but we have not actually found this to be true in our operations.

What we did see this past year was that specific products spiked at certain times. For example, in summer of 2020, wood products more than doubled in cost within a few weeks of time. The price has since receded from that level but is still much higher than before the spike. Electronic products have also been in short supply, as well as other materials that are put together in factories, as restrictions have slowed production. As 2020 wound down, steel prices had been increasing at a 4% rate each month. Now copper and other metals’ prices are climbing.

The construction workforce also remains a concern. As baby boomers reach retirement age, much of the skilled labor work force is leaving and not being replaced at the same rate. According to a labor study by the business research group Conference Board, since 1995, the number of men aged 16 to 24 in blue collar jobs has dropped by 10%.

Inflation as the Ramification

It is very likely in the 1st and 2nd quarters of 2021 that we will see the biggest year-over-year growth in GDP and inflation of any year on record because of the simple math comparing 2021 to the lockdown economy in 2020. Another inflation factor is the continued printing of money and debt that our government takes on. This has to result in inflation, and we are just starting to see the beginning reach us now. So many factors are swirling around that it is hard to predict, but at the very least we believe construction costs will increase again this year.

What Does This Mean?

Construction inflation can be substantial, but other factors coming into play may make the rise even larger in coming years. We’ve said it before, and it’s truer now more than ever. If you’re having conversations in your church, or even just among church leaders, about how your church building is hampering your growth or not meeting your ministry needs, don’t delay. Building a church will take plenty of time, even if you don’t procrastinate, and some elements of the process—like inflation—will always be outside of your control.

Start planning now. Reach out to have a conversation with us to get the process started. The road ahead can take longer than you might anticipate, and construction inflation means that a church building project could also be more costly than you planned.