What to expect when building a house in 2022 and beyond?
The pandemic has brought unexpected challenges when it comes to building a house. Not only have costs on many materials gone up but labor cost has increased as well. Labor shortages have caused delays. Some of the labor shortages are because of people being out due to the pandemic and people leaving their jobs.
In addition to that, there are many people making delayed home purchases, investment purchases, and 2nd home purchases. We've experienced a housing shortage that really hasn't ended although interest rates have gone up.
Building a home is the right choice for some people. Planning and having proper expectations will make the process go smoother.
- Completion date: Have a plan if the builder isn't able to complete your house in time. This is more common than ever. Don't be upset as it won't change anything and will just frustrate you more. If you're renting, make sure you can extend your lease if necessary. Builders don't cover that costs by the way.
- Time to build: Keep in mind some builders are quoting a year or more for a home to be built.
- Materials: Be prepared for material substitutions. For example, cabinet makers cannot keep up with current demand. You could experience a delay or a substitution. Don't get your heart broken if that happens to you.
- Timelines: When timelines are set, don't be upset if they get moved. It is happening to many homebuyers who are building.
- Other delays: Weather can also cause delays. In North Carolina, a bad storm or a lot of rain can cause a delay during warmer months. Snow or ice storms can cause delays during cold months. Permitting can cause delays as well.
- Interest rates: You're going to want to lock in your interest rate at some point. When you get pre approved, make sure you can qualify if the interest rate increase a couple points. Make sure the builder has told you that closing before your lock expires is possible.
- Appraisal Shortages: An appraisal gap isn't unusual these days. For many people building values will increase by the time you get to closing. However, that is not a guarantee. If there is an appraisal gap, most builders will expect you to cover the difference.
- Variable pricing: Some builders may increase the price during the build process. Prices for builders are increasing on a regular basis. Know what is in your contract.
- Micro managing: If you visit the house on a regular basis, you'll find things that need to be fixed. Outside of wrong materials or items that cannot be changed easily (walls in wrong place, etc), it is best you don't micro manage the builder. They will touch up paint, repair dents and scratches, replace broken windows, etc. prior to closing.
- Communication: Have the best communication you can with your Realtor and your builder. Open, clear, concise, and kind communication is best.
- Relax and enjoy: Building isn't easy even during a buyer's market. It can be even more frustrating in this market. Take a deep breath and relax as much as you can. It might be a bit of a bumpy ride.
Celebrate! Once you move into your new home, celebrate and enjoy it!