The last year-and-a-half has made a large swath of the public take a closer look at our surroundings and say, “Why is this house so small??” Consequently, a lot more people are seeking answers from the housing market. The market is responding in a big way - by driving up the costs of not only existing real estate, but also homebuilding.
Sundog Homes has heard the question, “Should I wait to build a home?” often in that time, and our answer is “No!” Even with record-high lumber prices and the cost of other goods and labor rising, it’s still a competitive market.
Fortunately, lumber futures are on the decline to close-to normal levels; as of this writing, they were at $551, a nice decline from a high of $1,670 in May 2021. “We are experiencing inflation in other areas that is normal year-over-year … like windows and doors and trim material,” according to Sundog Homes’ Sales Manager Phillip Gamble.
He also acknowledges that “Interest rates are still at an all-time low, so your buying power is still really strong,” right now. However, he warns that “Experts would say that we’re going to see a rise in interest rates over the next year or so, so what is your benefit of waiting?”
What’s Your Motivation for Building?
While consumers who are on the fence about building a home right now may think the prices will go down to what they were before the pandemic, Gamble doesn’t think that’s likely.
“I don’t think that’s a good strategy and I don’t think that’s reality. We know budget is huge, we get that it’s important, but look at the motivations for why you want to build and [don’t] get so locked in to lumber prices and where they’re at today and ... base a decision solely off of that”.
Sundog Homes’ Division President David Earley agrees. “If I ... wait a year and think I’m going to be able to pay the same as I was pre-pandemic, the other economic indicators say that is not likely,” he says.
Earley explains, “Housing is cyclical, but every cycle is somewhat different. The good news is that ... all indicators say that demand for housing is projected … in the next 2-to-5 years … as being tremendously strong. So … if demand is going to be that strong even if lumber prices start to retreat, then you have other costs that are going up.”
Your Home is an Investment
He also advises looking at building a home as an investment. He says, “With high demand and low supply, your values in real estate are a reasonable investment. This is your home, this is where your family lives ...where you live ...where you make memories. The market is going to tell you what the structure itself is worth at [any] point in time.”
The bottom line? Earley sums it up like this: “It’s like asking a donut maker, ‘should I buy this donut?’ Of course you should buy this donut! And 11 others just like it! Right now, today!”