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.
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.
SEDA New Homes, one of Jacksonville’s largest locally owned and operated home builders, has recently unveiled their gorgeous amenity center in the gated community of Linda Lakes in Clay County.
“There are so many amenities in Linda Lakes that homeowners will enjoy coming home to,” says Linda Semanik, Vice-President of Sales at SEDA New Homes. “These amenities, such as the gated entrance, scenic lakefront community pool, and playground, add value for our homeowners, making Linda Lakes a unique buying opportunity in Clay County.”
Lakeside Park, the social center of the neighborhood, is a beautiful 3+ acre outdoor amenity center that includes a lakefront community pool, playground, and a spacious cabana perfect for enjoying the scenic deck that overlooks one of the community’s largest lakes. There is also a recreation field, offering a place to practice or play soccer, football or lacrosse without having to leave the community.
Homes in Linda Lakes start in the low $300’s with all lots backing up to a conservation area or lake.
“All home sites were carefully positioned along the many conservation areas and lakes so that our homebuyers can select from either a conservation, park or lakefront lot, offering privacy with no neighbors immediately behind you,” says Semanik.
Linda Lakes gives residents ample opportunities to get out and enjoy nature, with acres of designated parks and green space and four fully stocked lakes for fishing enthusiasts. The community also has designated space for four-legged family members to run and play at the community Pooch Park.