You may have already heard about how the cost of lumber is rising, but you may not be aware of the impact it’s having on the housing market. According to Forbes, lumber prices have shot up by 375% in the last year, and another 22% increase is expected by November.
Homes are still being made, but the cost to construct new properties is up by about $24,386 per build. Here’s why: Last year, a stud (used to construct a home) was around $3. This year, the same stud costs between $6 and $8—the cost has doubled.
There are some ways to bounce back from these skyrocketing prices. If buyers left the market because costs are too high, it would give lumber mills a chance to catch up on their supply, and then lumber costs would decrease for builders. However, buyers aren’t ready to back down because interest rates are incredibly low.
There’s also a lack of inventory in our market, so builders are still constructing many new homes. In many situations, new construction homes are going for the same prices as pre-existing homes. It’s the same cost to buy a brand-new home as it is to buy one that was built years and years ago.
“Buyers aren’t ready to back down because interest rates are incredibly low.”
It’s leading some people to think we’re in the midst of another housing bubble, but our market is absolutely nothing like that of 2008. You can see an in-depth explanation of why in our monthly newsletter, but essentially, we aren’t in a bubble. Sales prices and interest rates are only going to continue increasing; in a bubble, prices go down. Not a single real estate expert is forecasting a crash.
It’s still a great time to buy a home, and we’d be happy to walk you through different ways you could secure the home of your dreams in our market. If you have any questions or would like more information, feel free to reach out to us. We look forward to hearing from you soon.
