If you’ve been in the market for a home for any length of time, you’ve become quite aware of how unusual this market actually is. Due to widespread supply chain issues, and skyrocketing demand that even seasoned real estate professionals have never seen, it is incredibly hard to simply buy a home.
Here at Eastwood Homes, nearly all of our communities are moving to an interest list for prospective home buyers. Some communities are paused while we wait on more homesites to be developed. And while quick-move-in homes (homes that we started building before they even had a buyer) were a normal part of our business mere months ago, they have now become an anomaly. But, why exactly?
One big reason is that lumber prices have increased 250% in one year since April 2020. What does that mean for our homebuyers, and our bottom line? The average price of a new single-family home has jumped by $36,000.
Like everything these days, there are ties to the pandemic. As our world shut down, many in the lumber industry dialed back, anticipating a slowdown. Surprisingly, the opposite happened, maybe because people had all that time on their hands for a remodel, or they simply got tired of their existing home after spending so much time there? While sawmill output increased 3.3 percent in 2020, single-family construction jumped 12 percent and the remodeling market increased 7 percent.
That’s not all. Tariffs dating back to 2017 and wildfires in California set the stage for the current market imbalance. Finding sawmill employees is hard, as is the case in so many industries, but it was pre-COVID as well. And one expert estimates it takes two years and $100 million to get a new sawmill up and running. That means there isn’t a quick fix. In fact, lumber futures contracts (or an investment agreement to buy and sell a contract at a future rate) through November are above $1,000, when the same 1,000 board feet of lumber usually traded in the $200 to $400 range previously. In May, that gauge of demand hit $1,645 per 1,000 board feet.
There is support from the national government to resolve the lumber issues. Talks during a meeting last week between the National Association of Home Builders and Commerce Secretary Gina Raimondo include pushing for a lasting lumber agreement with Canada, and more active forest management goals for U.S. national forests.
That’s the big headline, but it isn’t the end of what home buyers are facing.
Here in the Charlotte market, where Eastwood Homes is based, there is only an 18-day supply of homes for sale, according to a report released by the Canopy Realtor Association using MLS data. A six-month supply of homes means equilibrium in the market. For comparison, last year we had a 2.1-month supply of homes in April during the pandemic lockdowns.
Nationally, new homesite supply is down 24% nationally and anywhere from 25 to 33 percent in markets where we build, according to Zonda.
As if all this wasn’t enough, home builders are experiencing shortages or unreliable supply levels of everything from appliances to roof trusses, doors, windows, plywood, and more.
We share all this to explain why we may not be able to sell you your dream home on your first visit to our community, even if that’s exactly what we want to do. We love matching up our home buyers with their ideal homes!
We share this to help our home buyers see the bigger picture and understand that a waiting list for the next available homesite might be the best option in our current market. As “home sweet home” matchmaking experts, we have always emphasized buying the right floorplan for your needs, and just because the current real estate market is topsy turvy at the moment, that doesn’t mean you should buy the last 4-bedroom home listed in your preferred zip code and price range. Don’t take a shortcut to get into a different home when the right home is out there, but it may just take a little longer to buy and settle in.
We remain ready to help you find your best home, even if it takes a little longer than any of us ever expected. Contact our internet team at 866-551-7995 for help in any of our communities in the metro areas of Charlotte, Raleigh, or the Greensboro Area, North Carolina; Greenville, Columbia, or Charleston, South Carolina; Richmond, Virginia; and, Atlanta, Georgia. You can also reach them by email at [email protected], by completing any of our contact forms, or by clicking the "Text Us" button on the bottom right of our pages. We look forward to hearing from you!
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With the new year upon us, it means it’s time for another Pantone Color of The Year selection! This year to predict how 2021 will unfold, they decided to go with two colors that complement each other very well. They are Ultimate Gray and Illuminating, which is a bright and sunny yellow.
