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Published: April 26, 2021
"HOUSTON ? Homebuyers, builders, and even DIYers are shocked and stuck with crazy-high lumber prices. The price of lumber has increased about 180% since last year." [...] "Hollins says most new home prices are going up by $30,000 to $40,000 to help builders cover the cost of lumber. There are several reasons for the increase."
I *just* got off the phone with a friend that had house built recently.
They signed the deal in February 2020, just before Covid hit. The build started in August of 2020 but they were luckily locked in at the February number.
They were talking to the builder last month when he started construction on a house in the next lot over. I don't know the price of either house but I do know that the builder told my friend that the new build is a couple of hundred square feet smaller but was costing $36K more than her house. He also told them that he didn't know the exact number, but if he had charged them what he should have in August, it would have easily added $15K to their cost. The profit he made on her house was significantly impacted. The builder said that the lumber shortage is the cause of the increase.
No one will sell him huge stacks of lumber like he used to buy. He used to buy in "bulk" for a better price and store it for future builds. Now he's being told that if they fulfill large orders, they will have to say "No" to other clients and risk loosing them as customers when things settle down. That means that the builders are being hit twice. Once because of the price increase of the material itself and again because they can't get the same bulk pricing that they got on the larger orders. That problems works it way back up the supply chain so everyone is being impacted.
She also mentioned that friends of theirs had been working with an architect on a renovation project. They are still in the design phase, so no orders have been placed. They just put the project on hold due the high cost of lumber and how it was driving the price way beyond their budget.
It's not even that here. I was just told by a neighbor that a house on our street is under contract. I didn't even know it was on the market. The RE agent didn't have time to put the sign out. This year, every house in the neighborhood has sold within a week.
We've driven around many new developments (SWMBO wants to move) recently. Every house being built as spec has a "under contract" sign on it. Several developments have "Sold Out" signs on them, with no dirt moved on half the sites.
Just go to the BORG and look. They're pretty much a consistent markup sort of place.
I was looking at my supply of plywood, in the basement. I thought, "Hmm". It's all different sorts, though.
Is this in California? The market is far different in rural eastern Ohio where I live. I would live in my car vs. paying those kind of prices for a house... my house is appraised at $40k - 2k sq ft home. I paid $2k and change for it - foreclosure. $10K and sweat equity into it
- all I pay is $600 and change annually for property tax.
I believe "DerbyDad03" is somewhere in that area.
I see prices in Cadiz (picked at random) range from 40k for 1800sqft to
700k for 6000 sqft (413 N Main, cadiz).360 miles west in Indiana.
Hard to use a simple price/size comparison. Within 8 miles $60K gets you 928 sq ft, $960K gets you 988 sq ft. It depends on how much land you want. .5 acres or 38 acres.
The same holds for other house/lot sizes, of course.
The house in question is 2300 sq ft on 2.5 acres, at the end of a cul-de-sac. Farm land on 2 sides. Selling price range on Zillow is $314K - $423K They won't know what they will be paying until the appraisal comes in. Add $15K up to a max of $425K.
That's pretty bad, actually. You're paying 1.5% of the value of the property in taxes. I pay less than half that (.065%).
Here $60K doesn't buy you a lot, and if you have a lot it will ALMOST build you a double garage
That's a fair point. I'm on a small city lot. Defining small as a fraction of an acre, maybe 50 by 150 feet. Less than 0.2 acres. I own a couple vacant lots across the street as well. I figured that was smart move for less than $200 when they came up for auditor's sale.
Unfortunately, my city has one of the highest tax rates in Columbiana county. That being said, all factored in, including the cost of other taxes, groceries, general goods, and cost of living in general here, it's hard to beat this area for affordability. The greater Youngstown (OH) region has been listed as one of the best places to live in the US based on cost of living.
Articles are, well, are probably out dated before they are published.
More houses, new starts and actual neighborhoods, are being built near me than in the past 10 years. Builders for a short, period of time last year, had difficulty in getting materials. That was over in a matter of weeks. I see no shortages of any building materials including hardwood materials at all. As has been reported to my by a contractor friend in SA, Tx his friends in the suppliers end of the construction business have admitted that materials are readily available and they are making a killing as their cost's have gone back down but their prices have not.
Articles are always insignificant history reports.
Millennials and first time home buyers are pushing the new home market in the Houston area and apparently through out the country.
We were in contract to build a new home in September of last year. We locked in a price of $365K for a 3800 sq ft home. We would have been closing right about now on the home and would have gained $70K equity. The builder canceled all contracts on "to be built homes", claiming material shortages.
That neighborhood is now about 2 years old, just over 18 months old when we went into contract. There are double to triple the amount of homes in that neighborhood in the last 6 months as the first 18 months.
So we were going to be buying a home that is now selling for $70K more than what we went into contract for. Obviously there is no materials shortages. And it appears obvious that the builder wanted to make and sell the home for $70K extra himself.
We looked at 5 different local neighborhoods and the same story holds. Houses are going up at an alarming rate.
It was me, and we were in contract to build but the builder canceled the contract on us so that he could make more on the sale. There is in fact a completed home on the lot we chose now along with a that street being full of finished homes. That street was empty 5 months ago. Because new homes are literally increasing in price as often as twice a week we decided to wait until this crap goes back to normal.
Soooo the cost of construction materials in a new home is expensive but not that expensive. I was told by our builder that the materials cost of the average home was $35K and the average cost of the homes were $350K. They expected the cost of materials to go up by $12K on our home so we needed to go into contract to lock in the price. We did but the builder reneged 2 weeks later. Our builder on average is making $70K more on a home today than 5 months ago. Do the math.
This is a classic case of some one pissing on your boots and telling you it is raining.
Inflated materials costs should no longer be inflated, there has not been a reason for high materials cost for several months. But when the uneducated first time home buyers are willing to pay those extraordinarly prices why would a supplier go back to regular pre-covid pricing. Wait until people start going back to work and not needing a home with an office and the new home building goes back to normal rates and you will see materials prices go back to what they should be.
Some dear ex-neighbors of ours moved to to about 30 miles south of Roanoke VA. They are in a rural setting, beautiful green grass rolling hills, 13 acres with a creek at the back of the property and in the middle a 9200 sq ft 3 story home. $525K. They bought 18 months ago.
Don't blame it all on "uneducated first time buyers". This particular case involves homes being built for the retirement segment. Single level, no trip hazards, wider "aisles" for ease of getting around so they can age at home.
Uneducated? *Maybe* but since the houses are still being built, that must mean that the older crowd is just as ignorant as the youngsters.
Just to clarify, I meant to say uneducated in home buying and ownership.
Every age group has it's deficiencies. But right now, today, at the all time high of home building, what is the ratio of older buyers to first time home buyers.
And most older buyers have experience with home costs like property tax increases. The home we were going to buy would have had a $2K property tax increase from contract date to closing, and going up from there.
I'm not buying those numbers. Maybe the cost of stick is that much but there can easily be more than $35K in the kitchen alone, and another $35K in bathrooms.
At a buy-in of $4-500K, is it really first time buyers? If so, they're going to be in for a shock.
I guess I don't get your point.
The nearest grocery stores is in Roanoke, right?
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