The real estate and construction industry is headline news in 2021. The rising cost of materials, and more specifically lumber, coupled with the high demand for housing has seen prices of single family housing skyrocket across the nation.
It’s an unprecedented cost escalation.
RISING LUMBER PRICES
Extra-ordinary = Extraordinary Measures
Lumber-related products (which includes all the material for framing a home such as, the trusses, floor sheeting, trim, & doors) have ALL increased in price over the past 9 months, some by as much as 44%. This, plus increases in labor costs and workforce shortages, has led to an unprecedented housing crunch.
To put this in perspective, recent cost increases amounted to an additional $7 a linear foot in ordered lumber packages—and this was before the most recent spike in lumber futures this week. “On Monday, the May futures contract price per thousand board feet of two-by-fours jumped $32 to $1,326. That uptick once again triggered the circuit breakers and caused lumber trading to halt for the day." We have yet to see the results of these trading decisions.
But lumber is not the only material going up in price. The construction industry is also in the midst of a significant electrical material cost increase, due to the scarcity of copper. Not only is this natural semi-conducting metal in short supply because it is a natural resource, but it is in significant demand in many sectors outside homebuilding. As our reliance on digital business increases, so does the demand for copper in the data, technology, and communication sectors. According to Goldman Sachs, copper is the new oil.
In essence, construction cost increases, and material shortages are not specific to Adair. Many builders have capped sales or stopped selling unbuilt homes altogether in an effort to protect their bottom lines. Homebuyers are limited to an ever-smaller inventory of homes, resulting in bidding wars and big sales prices.
It’s certainly a unique moment in time to be in the housing market!
What Adair Can Do For You
With limited inventory to choose from, low interest rates, and COVID influences, many people are considering building homes on their own land. If you’re one of those people who want to build new construction and are considering Adair Homes as your general contractor, we want to tell you how we are facing this crisis and mitigating the cost increases.
1. Strong relationships with vendors means saving passed on to you. We have been working with the exceptional RidgeCrest Custom Cabinetry since 1972, and Inter-Pak Supply for over thirty years. You’ll receive high quality interior finishes at the lowest prices available thanks to our volume purchasing, warehousing, and direct delivery.
2. Your Land, Your Money. We don’t believe in marking up land or site development costs. In fact, Adair Homes provides every customer with a free, comprehensive site evaluation which can be taken advantage of BEFORE land is purchased. This way, you’ll find yourself in total control over where you build (tax rates can be different between city and county), and have the cost estimate for site prep at your disposal. This is really to our customer’s benefit. Increased property equity can be used in any way that fits into YOUR long-term plans.
3. Establish Your Costs. Your Home Ownership Counselor is a rare commodity in homebuilding. This is your personal liaison to the process—and now is the perfect time to utilize all the knowledge and resources they have at hand. After you’ve designed and planned your home with a reasonable budget in mind, your Home Ownership Counselor will work with our Purchasing and Drafting departments to make sure every penny of your budget is maximized—and once we have an approved concept—that’s your price.
4. Increased Price Protection. As a precaution against the urgency that the volatile markets create, Adair is offering our customers peace of mind. For years, Adair Homes has been proud to offer our customers an industry leading 120-day price protection policy. This hasn’t changed! However, in light of the current home-cost climate, we have extended this pricing protection up to 200 days in certain jurisdictions. Check with your Home Ownership Counselor for more details. We understand that when you encounter a price increase after your loan has funded, complications arise. This change to our sales process will decrease the urgency and allow for a more natural order process.
5. Construction Building the home of your dreams takes time and organization. Our crews are busy adapting policies and procedures at the ground level in order to get you into your home in a timely manner. Our mission is to provide the best possible home building experience—even in challenging times.
On Your Side
Ultimately, these cost increases will moderate over time. However, we can expect appreciation and inflation in the near future. That being said, you can rely on Adair Homes to always have your best interest in mind. Our company values integrity—and that begins with protecting and supporting our customers. Building your dream home within your budget is our mission, and we look forward to serving you in 2021.
About Adair Homes
With 51-plus years in the industry, Adair’s long-term commitment to treating each customer with honesty, integrity, and respect has paid off, 22,000 customers strong and counting.
At Adair Homes, our mission states: it is our privilege to build our customers the home they have always dreamed of. We believe in providing the greatest value for our customer’s dollar and finding innovative ways to value engineer homes. We believe that we can offer an outstanding customer experience that is both enjoyable and rewarding—and offer this one-of-a-kind customer experience as the largest on-your-lot builder in the West. For more info, get in touch with us here or call 1-844-518-7072.