Real Estate: Lumber prices soar!
By JESS BARRON, Lindsey’s Inc. Realtors
The current real estate market is the most competitive that I have ever seen. It is also the most difficult for buyers.
The rising lumber prices further complicate things. In fact, lumber prices are not rising, they are soaring to new highs. A recent article in Realtor Magazine said lumber prices were up 340% from last year (March 2020 to March 2021).
According to new housing data from the National Association of Homebuilders (NAH), the increase in lumber prices has added $35,872, on average, to the price of a new construction single-family home year-over-year. In Coweta County, new construction makes up about one third of homes for sale.
You would think this historic rise in lumber cost would slow the new construction market down but it has not. Single-family new construction jumped 41% from March 2020 to March 2021, according to U.S. Census Bureau data. Drywall is also up 7% year-over-year, 27% for copper (record high in March 2021) and 11% for land prices.
The increase in land prices is having a positive effect in land-rich Coweta County. The lot supply is shrinking quickly in Atlanta and north Atlanta so more and more builders are coming west and south to Coweta County to build. You may not think of Coweta County having an abundance of land, but compared to more populated areas, we really do.
We have seen rising lumber prices prevent clients from selling their current home and building a new one. In one case, we had clients paying significantly more to build a smaller home and receiving much less in value for their larger current home. This move did not make sense for our clients so they decided not to build.
I had other clients under contract with a prominent local builder who raised prices on their new construction homes across the board. My buyers understood and decided to move forward anyway. In the builder’s defense, he did not have much of a choice with the rising construction costs.
The multifamily sector of the market has also seen a dramatic change due to lumber costs. If you have tried to lease lately, you have probably experienced increasing lease rates. The rising lumber costs have added $12,966, on average, to a new construction multifamily home. This translates to an extra $119 per month, on average, in rent for apartment dwellers, according to new housing data from the National Association of Home Builders.
Jess Barron is an Associate Broker with Lindsey’s, Inc. Realtors and former President of the Newnan-Coweta Board of Realtors.