What You Need To Know if You’re Thinking About Building a Home
If you're ready to move up, you may be debating whether to buy an existing home or build a new one. And, given the current scarcity of properties for sale, you're willing to examine any option. While home builders are doing everything possible to build additional homes and help alleviate the supply constraint, they are also experiencing delays due to causes beyond their control.
Here's the latest on some of the most pressing issues confronting homebuilders today, as well as how they may affect your plans to upgrade. You can make an informed decision about whether to go for a newly built or existing home in your home search if you know what's going on in the business.
Problems with the Supply Chain
The first challenge that builders face is a lack of supply of various building materials. According to a recent HousingWire article:
“. . . Nearly everything needed in the homebuilding process is facing some sort of delay and subsequent price increase.”
The supply problem isn't limited to lumber, despite the fact that that's what gets the most attention in the media. Many other products, such as roofing materials, windows, garage doors, siding, and gypsum, are also impacted, according to the article (which is used in drywall).
The difficulty in obtaining these products is causing delays in the construction of new homes as builders wait for the materials they require to complete the project. And, because materials are in short supply, even when they do receive the product, the law of supply and demand drives up the price of those things. This is how HousingWire explains it:
“When supplies are low, charges inevitably go up, . . . Meanwhile, a lack of availability is causing huge delays, meaning builders are struggling to stay on schedule.”
The National Association of Home Builders (NAHB) agrees:
“Builders are grappling with supply-chain issues that are extending construction times and increasing costs.”
Shortage of Skilled Labor
But that isn't the only issue with today's new home development. Builders are also having a difficult time recruiting skilled personnel, resulting in a labor shortage that is further delaying their schedules. This is a continuous difficulty for the sector, according to Odeta Kushi, Deputy Chief Economist at First American:
“The skilled labor shortage in the construction industry is not new – it’s been an issue for more than a decade now.”
However, there is some good news. Construction jobs are on the rise, according to the February jobs report. In the above-mentioned piece, Kushi puts this good news into context:
“Overall this was a good report, . . . The supply of workers continues to fall short of demand, but the underlying momentum of the labor market recovery is strong, and falling COVID case counts provide further forward momentum.”
That indicates that, while finding personnel continues to be an issue for contractors, there are signs of progress.
What Does This Mean for You?
According to HousingWire, these factors can have an impact on today's move-up buyers:
“The residential construction industry is facing a crisis as builders manage the critical shortage of building materials and labor. Explosive supply and labor costs are forcing long delays. . . .”
So, when weighing your alternatives and deciding whether to build a home or buy an existing one, keep in mind the potential for delays in new home construction. While this does not imply you should rule out newly built homes, it does mean you should think about your timeframe and whether you're ready to wait while your home is created.
Understanding the current market conditions is critical to making the best decision possible when making your next move. Let's connect to make sure you have all of the information you require. We can make sure you're up to date on what's going on in our local market so you can confidently pick what's best for you, your priorities, and your schedule.