If you’re ready to move up, you may be trying to decide whether you want to buy a home that’s already on the market or build a new one. And since the supply of homes available for sale today is low, you’re willing to consider either avenue. While home builders are doing everything they can to construct more houses and help narrow the supply shortage, they’re also facing long delays due to factors outside of their control.
Here’s the latest on some of the key challenges homebuilders are experiencing today and how they could impact your plans to move up. When you know what’s happening in the industry, you can make an informed decision on whether to look for a newly built or an existing home in your home search.
Supply Chain Issues
The first hurdle builders are dealing with is the lack of supply of various building materials. According to a recent article from HousingWire:
“. . . Nearly everything needed in the homebuilding process is facing some sort of delay and subsequent price increase.”
The pinch on lumber is being felt locally here in Northern Michigan as well. A recent article in the Traverse City Record Eagle specifically addresses the perfect storm of high lumber prices stating:
“March Lumber, which had traded as low as $500 per thousand board feet in late August, blasted to $1,244…”
The supply issue isn’t just with lumber, even though that’s what’s covered most in the news. The article explains many other supplies are impacted too, including roofing materials, windows, garage doors, siding, and gypsum (which is used in drywall).
The difficulty in getting these items is dragging out timelines for new homes as builders wait on what they need to finish construction. And since materials are in short supply, even when they do get the product, the principle of supply and demand is driving prices up for those goods. HousingWire explains it like this:
“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.”
Skilled Labor Shortage
But that’s not the only challenge with new home construction today. Builders are also having a hard time finding skilled labor, which means they’re short-handed, further dragging out their timelines. Odeta Kushi, Deputy Chief Economist at First American, says this is an ongoing challenge for the industry:
“The skilled labor shortage in the construction industry is not new – it’s been an issue for more than a decade now.”
But there is good news. The February jobs report shows employment gains in the construction industry. Kushi puts this encouraging news into perspective in the article mentioned above:
“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 means, while finding workers continues to be a challenge for builders, there are signs of positive momentum moving forward.
HousingWire explains how these things can impact move-up buyers today:
“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. . . .”
Pros of Buying Existing Homes
- Ease in financing accessibility: Having an existing home offers more collateral to lenders making it typically easier to obtain financing for an existing home.
- Ease in planning your move: Once you’ve purchased a home you can begin to plan your move for the closing date indicated on the contract.
- Less time to wait: Buying an existing home is faster than waiting for a new home to be built, especially right now.
- Curb appeal: Oftentimes there is established landscaping that only needs to be maintained or further customized, rather than starting grass, shrubs, trees, and flowers from scratch. The same can often be said for garages, patios, and deck spaces. Existing homes can be purchased with extra amenities such as central air, irrigation or security systems already installed. These exterior functionality and beautification items can quickly become a high expenditure when building a home.
- Appliances often accompany the sale: Accessory items are usually included such as stove, refrigerator, dishwasher, washer, and dryer.
- Fees: If you build in a new development, you could be subject to HOA fees and certain building restrictions, while older homes are often free from such limitations.
- Newer isn’t always greener: Despite recent green building practices, restoring or maintaining an existing home is still likely more environmentally sustainable than building a new one.
- They just don’t build them like they used to: While there are beautiful new homes and extremely skilled home builders out there, existing homes can oftentimes possess deeper character, historical significance, larger lot sizes, as well as a level of exceptional craftmanship, created by skilled artisans of another era, simply by virtue of the mass-production manner in which homes are constructed now, or current prices and availability of high quality/local materials.
These are just some of the pros toward purchasing an existing home. So, when you weigh your options and try to decide between building a home or buying an existing one, factor the potential delay in new home construction into your decision. While it doesn’t mean you should immediately cross newly built homes off your list, it does mean you should consider your timeline and if you’re willing to wait an extended period while your home is being constructed.
Bottom Line
When planning your next move, understanding the latest market conditions is key to making the best decision possible. We can help you! To make sure you have all the information you need, let’s connect. Together we can make sure you know what’s happening in our local market so you can confidently decide what’s right for you, your priorities, and your timeline. Contact Brick & Corbett here!
