2020 has certainly been a year of challenges on so many fronts. In construction, we've felt the strain of supply chain shortages, labor shortages, and consumer spending fluctuations that have collectively impacted the way we deliver our services. However, we've also seen 2020 as a year of opportunity - for our team to find new ways to serve our clients and for our clients to finally move forward with the home of their dreams.
As the year has progressed, we've begun to see a window open for our clients - an ideal time for many of them to move forward with building their new home. Despite the difficulties and uncertainties the year has presented, for some 2020 might be the best time to build a custom home.
A More Informed Design Process
Spending more time at home has been a motivator for many to tackle DIY projects that they'd kept on the back-burner. As many of our clients will tell you, the time at home has also spurred many to realize that they're ready for a space that better serves their family. The weeks and months we've all spent living in our space in such new ways have highlighted the limitations of our homes - and many opportunities for improvement. We're seeing new clients begin the custom home design process with an unprecedented level of clarity about what they want - and don't want - in their dream home.
The pandemic has also given a growing number of people to move to areas where they've always wanted to live. When a commutable distance is no longer a factor, that could mean living closer to family or moving out to live among the mountains and trees. We have heard from clients who have the unique opportunity to build their dream home in their dream location and they have a very well defined list of must-haves to get their design process started.
COVID & Rising Construction Prices
We all know that the average cost of housing, whether building or buying, goes up every year - it's one of the reasons we invest so much time in our homes. Shaky production schedules during the early second quarter and increased demand for building materials and labor since the lockdown have been major factors in driving up construction costs. A lumber shortage has forced builders and lumberyards source supplies from Canada, which are subject to tariffs.
"Supply chain issues have combined to create the perfect storm, of sorts, in lumber in particular but other materials such as windows and steel are seeing the same challenges," said Kim Hibbs, president of Hibbs Homes and delegate for the National Association of Homebuilders.
In fact, the NAHB has reported a roughly 170% increase in the composite price of lumber since mid-April. The rising cost of materials continues to have a ripple effect on construction. Now is the time to lock into construction pricing before supply chain issues drive costs up more, potentially pricing you out of building a new home.
As Hibbs explained to Jennifer Blome and Art Holiday in a recent interview with 550 KTRS, "This year has been full of surprises. No matter when they build, if a client can come to the table with some degree of flexibility and patience to get through the process, they'll have a more enjoyable build overall. There are always surprises in building a custom home - even in the best of circumstances. Just trust that your builder has your best interest at heart and will do everything they can to support you throughout the process."
(Listen to the full interview below!)
Lowest Home Interest Rates on Record
According to Bankrate, the average 30-year fixed mortgage reached a record low in September of 2020. With the Federal interest rate so close to 0%, many homeowners and car buyers are locking into sub 3% loan rates that would have been virtually unheard of before. While financial experts are split as to whether lending rates are doing to go lower or edge up, the Federal Reserve recently announced we can expect historically low interest rates to continue over the next three years.
Starting a new construction project now means you can take advantage of the lower interest rates at the beginning of construction to permanent mortgages, which are typically a higher interest rate before they are converted. The earlier the project is started and completed, the more likely you are to be able to take close with a lower interest rate when converting to a permanent mortgage.
Housing Demand at an All-Time High
Finding the perfect home on the market is difficult enough for most families, and today it has become even more challenging. Across the country, and especially in high demand markets like Northern Utah, the existing housing inventory is staggeringly low. The low stock and high demand are causing more people to hold onto their homes, worried that if they sell they won't be able to find what they need on the market.
While some things remain uncertain, our homes have taken on renewed importance in the last year that is not likely going to change. Having a healthy, safe, and functional home is a top priority, and homeowners who are unlikely to find what they need on the market are choosing to design and build a custom home to achieve that goal. Building a new home today could mean getting a premium on your current home while building a dream home, which is an appealing prospect all around for many homeowners.
If you're considering moving forward with a custom home build project in late 2020 or early 2021, patience will be key. Supply shortages are improving, but the impact of the year's events is certainly being felt.
Listen to Kim's Interview
Learn more about how you can take advantage of the unique opportunities 2020 has created for homeowners by contacting our expert home building team.