Cost increases in New construction

By
Real Estate Broker/Owner with Real Estate Partners, LLC B 21410

Many of you know that about 50% of my business is new construction. In my part of the country, we are faced with construction cost increases that we have not seen since Hurricane Katrina, many years ago. These cost increases are created by the tarriffs placed on building materials, the shortage of materials, created by the storms that have hit Puerto Rico and Florida. It's the old law of supply and demand. There is more demand than there is supply. So, what does this mean? If I'm showing a home in a neighborhood that is complete or almost complete, but it is sold, the buyer wants tthe same home on another lot in the new phase that hasn't started yet. The same home, with the same amenities is going to cost him $3-$4 per square foot more. "Why?" the buyers asks. It's due to the rising cost associated with building. If it costs the builder more to build it, it's going to cost the buyer more to buy it. Simple Finances. For those of us, like myself, who have an inventory of homes that were built prior to the cost crunch, we can save our buyers large sums of money. The good part of all this is, the people who buy in the current phase are virtually guaranteed appreciation, due to the rising costs in the next phase. Now, another problem crops up: appraisals. We're working with the local board of appraisers and have just about worked that out, for now. It will be interesting to see what happens down the road.

Posted by

The Judy Wahba Team at Real Estate Partners, LLC

Judy Wahba - Broker/Owner

Steve Houck - REALTOR-Partner
"The Judy Wahba Team"
Real Estate Partners, LLC

Business: 601-942-2683
Fax: 601-956-7618
E-mail: steve@stevehouck.com

Judy Wahba's QR Code

close

This entry hasn't been re-blogged:

Re-Blogged By Re-Blogged At
Topic:
Real Estate Industry
Location:
Mississippi Madison County
Tags:
appraisals
building costs
home price increases

Post a Comment
Spam prevention
Spam prevention
Show All Comments
Rainer
489,458
Dörte Engel
RE/MAX Leading Edge - Bowie, MD
ABC - Annapolis, Bowie, Crofton & rest of Maryland

Dear Steve,

This is worrisome. A lot of our housing stock is quite old & is slowly being remodeled. I am sure, it will hit those owners equal to the new homes. 

Dec 08, 2018 01:37 PM #1
Rainmaker
161,135
Steve Houck
Real Estate Partners, LLC - Madison, MS

Dorte, It will but not as badly. The bulk of the cost increase is in concrete, lumber, copper, etc. For people simply caulking, painting and redoing fixtures and flooring, they won't be effected as much. I've always had a great respect for those who go into an older house and redo it. It keeps older neighborhoods going up in value. My house personal house was built in 1952

Dec 08, 2018 01:42 PM #2
Rainmaker
1,026,502
Anthony Acosta - ALLATLANTACONDOS.COM
Harry Norman, REALTORS® - Atlanta, GA
Associate Broker

Good evening 

Thank you for sharing your information with us Steve Houck 

Have a great day.

12/08/2018. 

Dec 08, 2018 03:28 PM #3
Ambassador
3,194,243
Debe Maxwell, CRS
www.iCharlotteHomes.com | The Maxwell House Group | RE/MAX Executive | (704) 491-3310 - Charlotte, NC
Charlotte Homes for Sale - Charlotte Neighborhoods

I'm sure the recently enacted tariffs are having some effect on prices of materials too. Hopefully the powers that be will end these unnecessary price hikes soon.

Dec 08, 2018 08:54 PM #4
Post a Comment
Spam prevention
Show All Comments

What's the reason you're reporting this blog entry?

Are you sure you want to report this blog entry as spam?

Rainmaker
161,135

Steve Houck

Buying a Home in the Jackson MS Metro or Surrounding Areas??
*
*
*
*
Spam prevention

Additional Information