The Pandemic and Its Impact on Housing - It's not what you think!
The cost of goods is skyrocketing, especially in housing. Buyers and sellers should be aware of changing market conditions and how that is impacting their buying and selling experience. It is really something no one is talking about and needs to be discussed with buyers and sellers alike to help educate everyone on what to expect in housing right now.
Are you a frustrated buyer? There are a lot of you out there. It is systemic across the country and is fueled by a couple of key factors.
1. Low interest rates. You can buy it for cheaper than you can rent it.
2. Lending has relaxed again so it is easier to obtain a mortgage
3. Employers are letting their employees live anywhere
4. The rising costs of goods and services
5. Labor shortage in remodeling and home building
6. Urban Migration
Since this pandemic began, a lot has happened in the consumer goods space, and with Covid-19 rates spiking again, you may see no end in sight for a while on the rising cost of remodeling a home, building a home, and the cost of purchasing a remodeled home and the availability to find a remodeled home to buy.
According to the NAHB ( National Association of Home Builders ) “the average lumber prices have surged more than 170% since mid-April, reaching a record high over $800 per thousand board feet. Oriented strand board prices have nearly tripled over the past year. NAHB economists estimate that these recent price spikes have boosted typical new single-family home prices by over $16,000, and the cost of a typical apartment by more than $6,000.” https://www.builderonline.com/builder-100/leadership/nahb-warns-that-record-high-lumber-prices-could-drive-up-housing-costs_o
Home building and house remodeling are becoming pricey. Buyers appetite for only move in ready properties is growing at a fierce pace as a result of the hassle and rising cost of home remodeling. Homes that have renovated bathrooms and kitchens are seeing a premium over their “need work” counterparts, and calculating a home’s value based on the price per square foot model has become obsolete as the demand for remodeled homes outstrips dated homes at an alarming rate. Larger square footage is not better in this new world, and it is no way to calculate a home’s value today. Just like that, the online home value models are outdated. They calculate values based on past sales and price per square foot, and they cannot evaluate the interior finishes, so they are out! For sellers today you really need a highly skilled REALTOR who is educated on the current market conditions to give you an accurate value.
Everything is just a little tougher to get and a lot more expensive. Delays are common as supplies of some goods are constricted. Remodelers are frustrated working through Covid conditions, and the public’s appetite for having people come into their home to do work has changed significantly. Few homeowners want contractors in their home while they are living through Covid spikes. There are delays on furniture, fixtures, tile, lumber, and siding. When we see worldwide shutdowns, those have an impact on supplies getting to and from the United States. There are several pricing pressures on housing for the foreseeable future, and if you are in the market to buy or sell, be aware of the following:
Pricing Pressures on Housing:
1. Lumber Prices have increased
2. There is a labor shortage of carpenters, plumbers, and electricians
3. The availability of supplies like tile and plumbing fixtures can be limited
4. Labors like masons and landscapers are booked out through 2021
5. The lead time for Furniture is as long as 6 months
6. Expect more shortages with the recent spikes in Covid cases.
You can buy it for less than you can build or remodel it at an interest rate below 3%. Mortgaging a home that is completely remodeled is cheaper than paying rent in most cases. Your home’s value is dependent on its condition and less on price per square foot more than ever before. We have contractors and service people to help you in obtaining the best price for your home. Expect further constriction and heavy competition for the properties that are in move in ready condition through 2021.
Powers Realty Group is a distinctive boutique real estate broker focused on the needs of customers delivering exceptional results. We are the trusted local experts. Call us today about buying or selling your home.Call Suzanne Powers