Why Are Construction Costs Skyrocketing?

By
Real Estate Agent with Coldwell Banker Residential Brokerage NRDS # 146013739

Sedona New Construction Rising At Alarming Rate!

New construction Rimstone West Sedona

Lumber Costs Rising

I recently had a conversation with a very prominent builder who puts out a quality product. In the course of our conversation, he told me that he was very concerned with the cost of lumber and the availability.  His costs have gone up 25% since the weather or hurricane disasters that we recently experienced.  In addition the recent fires in California will be adding to the lack of inventory and rising cost. This has not even been figured in yet!

Doing additional research, I found that builderonline.com referenced an article from Calculated Rick Finance & Economics that lumber random lengths are up 25% from a year ago. CME, which is a Futures Exchange states that lumber futures are up 45% year-over-year. 

In the Sedona area, lumber costs are affecting our builders. There is a small amount of land and lots available in Sedona proper. This limits home construction to one build at a time. Generally speaking, with all the costs involved, a resale home is a better deal. 

But there are other areas such as Cottonwood, Cornville and Clarkdale that have seen large areas being developed by one or more builders. These new homes can be considered semi-custom builds. 

 

Buyers Need To Consider

Typical lumber costs are between 60%-70% of the home building costs. Labor

costs the other 30% to 40% (costowl.com). With building costs continuing to

rise, buyers need to consider the pluses and minuses of buying new.

Normally, Lumber costs vary at different times of the year, but these disasters

have stressed the lumber market. 

 

Pluses For Purchasing New

  • Did I mention the home is brand new!
  • If bought early, you pick out the finishes.
  • You may be able to custom design it - bump out a wall, add an extra garage, etc.
  • Modern open floor plans - some have 2 master suites.
  • You get a builder's warranty - remember it's brand new!
  • All appliances, HVAC, plumbing, electrical, roof, etc. is all brand new!

 

Pluses For Purchasing A Resale

  • You can negotiate price much easier than on new homes. Seller may be motivated. 
  • Generally, you get more for the money. 
  • Mature landscape and possible hard-scape is already done.
  • You know exactly what you are getting - it is already complete!
  • Neighborhood is established.
  • You may get quality amenities that are absorbed in the negotiation. 

Also check out my blog on steel construction:

"Why You Should Select Steel Instead Of Wood

For Your New Home Construction"

Steel Construction in Sedona

 

Always remember that as a buyer for a new home, you should be represented

by your real estate agent. Seller agents are there to represent the seller.  As a

buyer agent, I will be there to represent your interests and negotiate on your

behalf. Give me a call to see how I can help you with your real estate needs. 

~ ~ ~ 

 

 


 

As a Coldwell Banker Sedona Arizona REALTOR®, my primary goal is to help my customers obtain their dreams, as well as satisfy their financial goals and objectives through real estate. From the moment I am contacted, you will observe my seasoned ability to provide you with "World Class Service" and that "personal touch" while utilizing a complete package of technology options that are of the utmost importance and so critical in today's market.

I will tailor real solutions to fit your specific needs. - Sheri Sperry -

YOUR Solutions REALTOR®

See Reasons Why Sheri Is Your Solution

Solutions For Buyers

Solutions For Sellers

 

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Topic:
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Location:
Arizona Yavapai County Sedona
Groups:
Arizona Homes
Posts to Localism
Marketing 101
Old Farts Club
Sedona Arizona & Verde Valley Real Estate
Tags:
buyers
new homes
new construction
sedona
sellers
resale homes
steel construction
wood construction
lumber costs

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Rainmaker
3,831,646
Dorie Dillard CRS GRI ABR
Coldwell Banker United Realtors® ~ 512.750.6899 - Austin, TX
Serving Buyers & Sellers in NW Austin Real Estate

Good evening Sheri Sperry - MCNE® ,

I was at an economic forecast this morning and they covered the sky rocketing costs of builders.. first it's the land and then labor and just looking at the garage bins out front of a home being built the waste of lumber and materials, its appalling!

Jan 18, 2018 07:10 PM #1
Rainmaker
3,304,494
Wayne Martin
Wayne M Martin - Chicago, IL
Real Estate Broker - Retired

Good evening Sheri. Lumver scosts are going to put a burden on new construction for the forseeable future. Enjoy your day!

Jan 18, 2018 07:25 PM #2
Rainmaker
2,946,229
James Dray
Fathom Realty - Bentonville, AR
Exceptional Agents, Outstanding Results

Morning Sheri.

Steel around here except for commercial, just hasn't caught on.  I can see the advantages

Jan 19, 2018 01:39 AM #3
Rainmaker
3,268,902
Sally K. & David L. Hanson
EXP Realty 414-525-0563 - Brookfield, WI
WI Realtors - Luxury - Divorce

Mother Nature can cetainly inflict damage that causes price increases in a variety of ways....and nothing that the building trades can avoid unfortunately.

Jan 19, 2018 02:42 AM #4
Rainmaker
3,134,584
Nina Hollander
Coldwell Banker Residential Brokerage - Charlotte, NC
Your Charlotte/Ballantyne/Waxhaw/Fort Mill Realtor

Great explanation, Sheri... so many home buyers have no clue... and then there is the transportation of all the building materials, as well.

Jan 19, 2018 04:32 AM #5
Rainmaker
3,021,913
Scott Godzyk
Godzyk Real Estate Services - Manchester, NH
One of the Manchester NH's area Leading Agents

Same here Sheri Sperry - MCNE® and my proposed addition is coming in way higher than i thought

Jan 19, 2018 06:09 AM #6
Rainmaker
1,523,547
Amanda S. Davidson
Amanda Davidson Real Estate Group Brokered By eXp Realty - Alexandria, VA
Alexandria Virginia Homes For Sale

Sheri, you give a great explanation as to why the costs are increasing. Great insight for someone considering purchasing new construction.

Jan 19, 2018 10:49 AM #7
Ambassador
2,225,154
Wanda Kubat-Nerdin - Wanda Can!
Prado Real Estate South - St. George, UT
So Utah Residential, Referral & Relocation REALTOR

We just had our enonomic summit here and they did mention the rising costs of materials Sherie. Another reason to build now rather than adding potentially thousands onto the price. Great post and jave a fantastic weekend!

Jan 19, 2018 11:53 AM #8
Rainmaker
4,108,085
Joan Cox
House to Home, Inc. - Denver Real Estate - 720-231-6373 - Denver, CO
Denver Real Estate - Selling One Home at a Time

Ours is also Sheri, and builders cannot keep the trades at the site.  Other builders offer more and off they go.

Jan 19, 2018 01:47 PM #9
Ambassador
1,868,855
Debb Janes EcoBroker and Bernie Stea JD
ViewHomes of Clark County - Nature As Neighbors - Camas, WA
REALTORS® in Clark County, WA

These are real concerns faced by builders and the short term future of new construction prices - and agree with Joan Cox they have trouble keeping the subs. As for waste, my son has a friend in Alaska who built his entire business around picking up the scraps from new contruction - recyling - repurposing and  reselling. He worked in construction and the wasted materials were nagging at him - enough to be a solution. 

Jan 19, 2018 03:00 PM #10
Rainmaker
2,557,961
Myrl Jeffcoat
GreatWest Realty - Sacramento, CA
Greater Sacramento Real Estate Agent

Interestingly enough, I had wondered about construction costs rising during the wildfire season.  A shortage of good lumber is a critical thing.

Jan 19, 2018 05:13 PM #11
Ambassador
3,983,177
Debbie Reynolds
Platinum Properties - Clarksville, TN
Your Dedicated Clarksville TN Real Estate Agent

The margin for profit to the builder is very small as the builders pack the homes with amenities and pay part of the closing costs here in Clarksville. Good article, Sheri.

Jan 19, 2018 06:38 PM #12
Ambassador
1,644,790
Joe Pryor
The Virtual Real Estate Team - Oklahoma City, OK
REALTOR® - Oklahoma Investment Properties

Concrete is doing the same. Add in the cost of land and labor and this is what is driving our prices higher.

Jan 20, 2018 08:49 AM #13
Rainmaker
1,838,855
Michael J. Perry
KW Elite - Lancaster, PA
Lancaster, PA Relo Specialist

Our Average Sale price has been increasing each year (as well as our lot prices).

Feb 05, 2018 12:27 PM #14
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Rainmaker
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Sheri Sperry - MCNE®

(928) 274-7355 ~ YOUR Solutions REALTOR®
Don't know Sedona AZ? Let me answer EVERY question! Call me!
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