Yes! Lumber prices have finally dropped significantly since peak prices in July. Should prospective home buyers get overly excited? Probably not because there are three anomalies to consider if consumers are thinking there is a direct correlation to the cost of homes because lumber has dropped.
Anomaly 1
Walk into any restaurant today and you will see plenty of seating, but the wait time is 45 minutes or more because there is not enough staff to open more seating. Since the pandemic, the working population is being more selective in where they work and taking advantage of higher-paying jobs. This dilemma crosses over into construction. Laborers are jumping from one company to the next, seeking the highest pay possible. As a result, we are noticing subcontractors going up significantly on their rates to keep existing staff intact. In some cases, smaller businesses are dissolving because they can’t keep up with the demand because of staffing challenges.
Anomaly 2
Adding to the labor issues is the increasing cost of other materials: electrical wiring, pvc pipe, windows, shingles, doors, and flooring. Additionally, for anything that requires resin, we are seeing longer arrival times. A lot of companies are being forced to make changes in this unpredictable environment. Michael’s Homes has always taken pride in allowing customers more flexibility when it comes to building a home. However, the material shortage and consistent changes have temporarily forced us to stop allowing customers to make selections. Thankfully, we have a designer on staff that does a great job of coordinating the exterior and interior home based on the material available at the time selections must be made. We do provide an option to reserve one of our builds for $3,000 refundable deposit and if the customer doesn’t agree with the selections a cancellation with a full refund is granted. At a minimum, the customer has the opportunity to lock in a home instead of getting caught in multiple offer scenarios. For details about this process contact us.
Anomaly 3
Redfin has a cool data center that is available to the public. When looking at the percentage of people outside the Nashville Area looking for housing, New York, Los Angeles, Chicago, Seattle, San Diego, Washington DC and the Bay area, make up a large percentage of seekers. All these cities have a substantially higher cost of living than Nashville and residents are selling their homes, cashing out, and moving to Nashville with cash offers and no contingencies. As a result, everything home around the cash offer home will increase arbitrarily.
We are living in unprecedented times. It’s hard to determine if the cost of housing will continue to increase as it has over the past year and the anomalies outlined above will make stabilizing home sales challenging for the Nashville Market.
