Digging Into Rising Dwelling Development Prices

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Builders have a busy start to their 2021 construction season. Demand for single-family homes is currently driving most of construction in northern Michigan.

Bob O’Hara of the Home Builders Association of the Grand Traverse Area says, “It’s definitely been an interesting 12 months. There is no doubt about that. The house building industry in Michigan was largely closed for several weeks. “

Construction work stopped during the pandemic. But when the crews got back to work, they were incredibly busy due to the pent-up demand. And now, at the start of 2021, things are really facing another busy construction season.

Josh Winkler of Winkler Contracting is building new homes in a new subdivision in Blair Township. “We took a break last spring… that really set things back. Once the restrictions were lifted and we were allowed to go back and build, we were in the middle of a big project. So we put that through and then the phone just rang. “

O’Hara sees it from the members of his entire organization. “The builders are busy. Seems like everyone wants to renovate their home or want a new home right now. The demand for living space is increasing in Traverse City. “

Winkler says: “We just can’t keep up. As busy as we want to be. We’ve got our hands full here … endless calls. It hurts to turn down the job. “But Winkler says they had to say no to Jobs because they are busy. “It is one of those festival times of the year. You hear of feast or hunger. It’s definitely a festival right now. These sell before we even have them built. “He says developers” just give us plans and we build them. “

“I know a lot of people come here and there just aren’t any houses. We try to do our part and offer these people a home they can move into. It takes about two weeks to finish one. The usual processing time is four to six weeks, from the start of the project to moving in. “

The high local demand is not only to be found in our region. In part due to the scarcity of supplies from California wildfires and freezing in Texas, the cost of lumber and other materials has continued to rise this year.

Winkler says: “It seems that there are longer waiting times for windows, special products and customized doors. Manufacturers also had a break. So you are struggling to keep up with the demand. ” House lumber

O’Hara agrees. “The price of sawn timber has risen lately. It increased last year, but it increased again. And it didn’t run down. “

“A number of such supply chain problems are affecting the market, making it difficult for home builders and buyers to get a good deal on a home.”

One of the estate’s owners in Blair Township said lumber prices more than doubled over the past year – and in some cases rose 200%. Matt Hodges is Partner at Lakewood Trails Development and Principal Broker of the Kultura Group. He says, “It’s almost a perfect storm with (everything) that’s happening in the world today.” At the beginning of the pandemic, “when production stops but the need for living space doesn’t stop … prices go up.” And he adds, “We don’t feel that easy yet because we’re still behind on orders.”

House building 2“With imports such as windows, sawn timber, etc. from all over the world and dealing with COVID itself, prices continue to rise. Much of the land’s indoor and outdoor insulation (siding) comes from Texas, which has just suffered a major freeze. “You lost tens of millions of tons of product. They are now backdated 12-26 weeks on many products! “

And Hodges says the California wildfires also had a big impact. “With thousands of homes lost in fires on the west coast having to be rebuilt, it adds to the shortage in the supply chain. That’s why prices are rising again. “Hodges also says that interior door prices are up 80% and clapboard prices are up 35%. At Lakewood Trails, we are fortunate to be able to purchase both in large quantities and, in many cases, directly from the manufacturer. “

O’Hara agrees that wood isn’t the only problem. “All kinds of materials are increasing. And that has to be passed on to the home buyer or the builder has to make a loss from it. It’s about pushing people out of the market. “House building 5

O’Hara says the average house cost has increased by $ 25,000. And that can matter. “For every $ 1,000 the house price increases, the National Association of Home Builders calculates that 150,000 families will be excluded from the market for a house. Millions of people are being excluded from home buying. “

Building your own home also puts a strain on the job market. “One of the main problems that builders have dealt with is the labor shortage. We have been working on this for years. “

Winkler sees it too. He says most good workers are already working. Others are new to the construction industry or new to the region. “There are so many contractors out there asking for help, that they can be caught as quickly as they are here.”

O’Hara says the full effects of the pandemic, house prices, and the workforce may not be seen for a few years.