While real estate markets are constantly changing and responding to larger economic forces, the last nearly two years have really thrown a curve ball to the industry at large. Although national home prices had been on a steady incline prior to the pandemic, since summer of 2020 they have increased exponentially, by 18% in fact, and it will be a while before they slow down. Here’s why:
August 2019: $245K
August 2020: $257K
August 2021: $303K
August 2022: $338K]
Price Increases Explained
For existing homes, scarcity was, and is, the main factor driving up their cost. For new homes, the challenge has been scarcity + the rising cost of lumber and other building materials. From 2019 to the all-time peak in May 2021, lumber increased by over 400% for 1,000 board feet. Lumber is the #1 material used to frame houses, and according to the National Association of Home Builders, that cost added an average of $30,000 to each new home.
Today, the cost of lumber has plummeted since May, but at $600 per 1,000 board feet, it is still well above the $400 averages we saw in 2019. Based on production and demand cycles, the cost is expected to continue rising at least through next year. What that means for homebuyers is that, while home prices have stabilized in some parts of the country, they have definitely not decreased, and they, too, will continue to rise for the foreseeable future.
Lumber is not the only building material that costs more today. Materials and components such as paint, latex, caulking, have all increased as well as metal products like copper wire and structural steel.
Why Now is Still a Great Time to Buy
Because of the unpredictable nature of the real estate market, the best time to buy is when you are ready. If you are ready to make a move and build your dream home now, and are financially able, there is no question that it is a great time to buy. Interest rates continue to hover around record lows, which means, even with the added cost of lumber, you can still afford "more house" than you could could just two years ago.
In 2019, the average interest rate for a 30-year fixed rate mortgage was 4.25%. On September 15, 2021, it was 3.03%. For more up-to-date and complete information on interest rates and mortgage options, we encourage you to speak with a lender.
In summary, yes — the real estate and mortgage industries can be unpredictable, but there is no guarantee that tomorrow, next month, or next year will be a better time to buy than today. In fact, the forecasts are showing that the costs of lumber, materials, and therefore housing will continue to increase for the foreseeable future.
At Brown Haven Homes, we are thankful for our strong vendor relationships, which have enabled us to continue building homes for our valued customers with very little disruption. We are proud to continue building expertly-crafted, high quality homes in North Georgia, Western North Carolina, South Carolina, and Tennessee at affordable prices and with the level of care and customer service that we've become known for. And with our unique Price Promise, once we have finalized your agreement and broken ground, your price will never change.
If you are ready to buy, we are ready to build! Contact us today to learn more about our custom home building process and move into the home of your dreams sooner than you ever expected.