|
Back to Blog
Supply & Demand5/8/2021 
Many real estate economists have called on new home builders to ramp up production to help relieve the shortage of inventory of homes for sale throughout the United States. The added inventory would no doubt aid buyers in their search to secure their dream home, while also helping to ease price increases throughout the country.
Unfortunately for builders, there are many forces that are making it difficult for them to do just that! Last week at the National Association of Real Estate Editors 51st Annual Conference, CoreLogic’s Chief Economist Frank Nothaft broke down the 4 ‘L’s of New Home Construction: Lots, Labor, Lumber, and Lending. The concept of supply and demand is ripe in the new home construction industry. The four ‘L’s of new home construction are each suffering a supply problem, and with that comes added costs. Let’s break it down! Lots – There is a shortage of land near metros at an affordable price, causing builders to move farther and farther away from cities to keep costs down. This isn’t always an attractive option for those who want to stay close to work. Labor – The Great Recession forced many skilled construction and trade workers to find other sources of income once their jobs were lost at the time of the crash. Even though the overall housing market has recovered, these workers have not returned. Those who remain are starting to age out and retire, causing even more of a shortage and additional costs. Lumber – The cost to build a new home is directly tied to the cost of the lot and the cost of the supplies needed to build the home. Lumber costs continue to escalate due to policies restricting the importation of Canadian lumber, making larger luxury homes an attractive option to recoup costs when selling, rather than building smaller single-family homes and making less profit. Below is a graph showing the increase in cost of 1,000 board feet of framing lumber. Below is a graph showing the increase in cost of 1,000 board feet of framing lumber. 
Year-over-year, lumber costs are up 13% after reaching a high of $433 in the second week of April.
Lending – During the Great Recession, many small community banks were forced to close their doors. These banks were a great source of capital and lending for builders looking to borrow money at a low interest rate in the community in which they were building. Tougher lending standards have made borrowing funds more expensive and more difficult for builders. Bottom LineAdditional costs across all 4 ‘L’s have made building luxury properties more attractive to builders as they are able to make a larger margin with the higher sales price. The move to scale down to starter and trade up homes to help with supply will mean any additional costs are absorbed by the builders unless the supply of the 4 ‘L’s can increase! Get started with a FREE New Construction Consultation
Back to Blog
STOP Renting3/26/2021 Start Owning. Make Homeownership Your Reality.
Spending more time at home over the past year has many people really thinking hard about buying a home instead of renting one. If you’re considering buying a home this year, register for our FREE virtual workshop to discuss the options that match your needs.
Thursday, April 22, 2021 7:00 - 8:00 PM CST Via Zoom (Registration Required) We're teaching renters how to use real estate to build a legacy and create wealth for generations to come. Register for this workshop to learn: • How to determine how much you can afford to spend on a home • What credit score is needed for approval • What type of homes you can purchase • How much money you may need for a downpayment
Back to Blog
Leverage for Sellers3/2/2021 
How Much Leverage Do Today’s House Sellers Have?If you’re considering selling your house now but worry a huge obstacle stands in your way, book a complimentary Seller's consultation. Maybe with the leverage you currently have, you can negotiate a deal that will allow you to make the move of your dreams.
Back to Blog
Want to Build Wealth?2/15/2021 
Every year, households across the country make the decision to rent for another year or take the leap into homeownership. They look at their earnings and savings and then decide what makes the most financial sense. That equation will most likely take into consideration monthly housing costs, tax advantages, and other incremental expenses. Using these measurements, recent studies show that it’s still more affordable to own than rent in most of the country. There is, however, another financial advantage to owning a home that’s often forgotten in the analysis – the wealth built through equity when you own a home. |
- Realty Executives Integrity (Northshore)
- 4655 N. Port Washington Rd., Suite 300
- Glendale, WI 53212
- (414) 467-8003