The impact of today’s economy on the home building industry is being felt everywhere. This blog by Rebecca Lowrey Real Estate Group in Huntsville, Alabama explains what we are all experiencing in these difficult times:
New Construction Changes – March 8, 2022
Today I want to share some information about new construction in Northern Alabama. More and more builders are waiting to price their homes until they’re nearly complete. In the past, they would price their homes at the beginning of construction, but they aren’t anymore because there are just too many price fluctuations for building materials right now.
Builders are also either limiting their number of pre-sales or not doing them at all these days. Some of them have wait lists or a certain number of pre-sales they can contract monthly. A pre-sale is a home you purchase before construction begins, so you’re selecting the floor plan and interior finishes ahead of time.
“Price increases can happen on building materials at any time.”
We’re also seeing more builder contracts because the price at contract for building a home is calculated based on the current building material prices, and price increases can happen on building materials at any time. For the same reason, we’re seeing more escalation clauses on new-builds, and if it goes into effect, the initial contract price rises by the percentage written in the escalation agreement. It’s an increase in your financed amount, not an immediate out-of-pocket expense.
Luckily, there are still builder incentives in this market. Some will pay a portion of the purchaser’s closing costs if they use the builder’s preferred lender; it’s commonly a local lender or an extension of the builder’s company.
Below is an update on the current housing market that was posted on March 11, 2022 on the Builder Magazine online edition by Vincent Salandro:
RISING COSTS, SUPPLY CHAIN CHALLENGES CONTINUE TO HINDER HOME BUILDING
Builders are reducing SKUs in an effort to work around continued supply chain disruptions.
By Vincent Salandro
Amid a period of robust home buying demand, supply chain disruptions are hindering companies at every stage of the home building process, creating backlogs and shortages across the country.
Pandemic-related factors have caused raw material prices to rise significantly in the past few months after a period of moderation, and transportation delays have caused sourcing issues for builders in many key product areas, including windows, garage doors, and appliances. Raw material prices are having a direct impact on home price appreciation, with the NAHB estimating lumber price increases have added $18,600 to the price of an average new single-family home since the fall.
A survey of home builders by Zonda conducted in January found 90% of builders increased prices month over month; the majority of respondents said price increases were a direct pass-through because of rising material prices. The magnitude of price increases also are growing larger compared with more moderate price hikes between $3,000 and $5,000 in the fall months of 2021. According to the Zonda survey, approximately one-third of the reported price increases from the January survey are between $10,000 and $20,000.
The Zonda survey also indicated that nearly 90% of builders were intentionally capping sales due to production capacity issues related to the supply side and inability of inventory to meet high demand. Approximately 93% of builders are reporting that supply disruptions are still a “major issue” to their businesses.
As you may know, the housing market we are in today is very different than any other time in history. In my 40+ years in real estate, I have never experienced anything like what we are facing today. I want you to know that we are working closely with our vendors and teams to ensure any setbacks and delays are minimal.
Attached is an article published by the Associated Press on September 23, 2021 that fully explains these trying times and gives some insight into the current housing market.
Below is the article, or click here https://apnews.com/article/lifestyle-business-economy-home-sales-prices-34a4cc778edd0c71b5a76f106a48ca54
Inflation Forces Homebuilders to Take it Slow, Raise Prices
By ALEX VEIGA September 23, 2021
LOS ANGELES (AP) — Even in the hottest U.S. housing market in more than a decade, new home construction has turned into a frustratingly uncertain and costly proposition for many homebuilders.
Rising costs and shortages of building materials and labor are rippling across the homebuilding industry, which accounted for nearly 12% of all U.S. home sales in July. Construction delays are common, prompting many builders to pump the brakes on the number of new homes they put up for sale. As building a new home gets more expensive, some of those costs are passed along to buyers.
Across the economy, prices having spiked this year amid shortages of manufactured goods and components, from cars and computer chips to paint and building materials. The Federal Reserve meets this week and officials’ outlook on when they might start raising interest rates could indicate how worried the Fed is about inflation.
The constraints on homebuilders are unwelcome news for homebuyers, already facing historically low levels of resale homes on the market and record prices.
For the 6th year in a row, SEDA New Homes was voted Best Local Home Builder in the Florida Times Union Bold City Best consumers’ choice competition.
“We would like to thank our SEDA family of homeowners, hardworking subcontractors and dedicated employees who have all make this possible,” says Linda Semanik, Vice-President of Sales at SEDA New Homes.
Their dedication to delivering superior customer service has propelled SEDA New Homes to one of the largest locally owned home builders in the Jacksonville area, with communities located in Duval, Clay, St. Johns and Nassau counties. They are also one of the few home builders who will build their plan on your land.
SEDA New Homes celebrated National Bring Your Dog to Work Day on June 23rd. The holiday began in 1999 in order to celebrate companion dogs and encourage adoptions.
“Our dogs, Callie, Sasha and Rob Roy are a big part of our
family,” says Linda Semanik, Vice-President of Sales at SEDA New Homes. “We
wanted our SEDA family of employees to enjoy spending the day with their furry
Nine SEDA employees participated with a total of 13 dogs at the office on that very happy, tail-wagging day.
“Dogs have always had a special place in our heart,” says Semanik.
Over the years, the Semanik family has shown their love for canine companions by rescuing dozens of dogs and giving them a forever home.
Today’s unprecedented real estate market is confusing and stressful. But unlike other home builders who are only putting your name on a “wait list,” releasing a few lots at a time and making you enter a drawing to hopefully get one of those homesites, or building only spec homes that you then have to enter a bidding war to maybe win, SEDA New Homes is conducting business as usual.
We understand that time is money, and waiting to find out if you have won a drawing to purchase a homesite or won a “highest and best offer” bidding war will cost you money. Stop by our model homes today, choose a homesite, choose one of our gorgeous floorplans and pick your options, and we will begin building you the home of your dreams!
It is time to vote for SEDA New Homes as Jacksonville’s Best
Local Home Builder!
The Florida Times Union is conducting its annual Bold City Best
competition to find the city’s best businesses in categories ranging from dentists
to pet services to home builders.
SEDA New Homes has won Best Local Home Builder for
the past 5 years and we would be honored to win that title again this year.
For over 39 years, SEDA has been building homes for
thousands of First Coast families. We build in communities located in St.
Johns, Clay and Nassau counties currently, with projects opening later this
year in Duval County.
We are a veteran-owned business who prides itself on providing
quality homes with superior craftsmanship. We have been recognized with
numerous awards from both the Bold City Best competition and the Northeast
Florida Builder’s Association Parade of Homes; however, the best compliment that
our SEDA team receives is the trust of repeat customers who refer their family
and friends to us.
Our goal is to provide excellent customer service before,
during and after the sale and to give our customers an extraordinary home-buying
We would appreciate your vote. Click here and go to the LOCAL HOME BUILDER category. Voting for the 2021 Bold City Best competition runs June 11-27th.
SEDA New Homes, one of Jacksonville’s largest locally owned home builders for many years, has been committed to growing a million square feet of wildflowers annually.
“We have been growing fields of native wildflowers to add beauty and help with the local honeybee population,” says John Semanik, owner and President of SEDA News Homes. “We also try to incorporate wildflower areas in our new home communities.”
Semanik has always been interested in wildflowers and his love for the hobby only increased when he attended a local meeting by the Florida Native Plant Society 20 years ago. The goal of the society is preserving, conserving and restoring the native plants and native plant communities in Florida.
According to the University of Florida, the use of pesticides is one of the growing concerns regarding the decline of the honey bee populations across the United States. Semanik hopes that by adding a million square feet of wildflowers each year that the bees will have a place to thrive and increase their numbers.
“Bees are important to the state of Florida, and the entire world,” says Semanik. “Bees play a crucial role in Florida’s agriculture, environment and economy, and more than one-third of the world’s food production relies on pollination.”
A portion of the proceeds from each sale of a SEDA New Home helps support this project. Semanik, who has many bee colonies to complement the wildflower fields, donates much of the honey that is produced, making it a win-win for everyone.
The bee hives are placed in an area that will allow the colonies of bees to pollinate multiple fields of wildflowers.