Important Note About Pricing: This article discuses the cost of building, which, for the past few years, has wildly fluctuated. If you're planning on building a custom home, please do not use the figures stated here for your calculations. Simply contact us, and we will provide you with more accurate numbers.
More than ever, I’m receiving inquiries about the “state of the world” when it comes to home construction. The post-COVID world looks a bit different as compared to 18 months ago; at least temporarily, we’ve seen material shortages, supply chain issues, and, especially, runaway lumber pricing. This has captured the attention of just about anyone considering a new home build, and rightfully so. It certainly has been a challenging season, but as with any challenge, there are opportunities within!
Generally, there are three different types of lumber that make up the majority of a lumber package in a home; dimensional lumber (2×4, 2×6, etc.), sheet goods (plywood/ OSB), and engineered products (I-joists, LVLs, etc.). As of the date of the writing of this blog, lumber prices have finally started their long-awaited decline.
Dimensional lumber started the trend about a month ago, and sheet goods started about a week ago, with the decline being very sharp right out of the gate. No one has a crystal ball, but expectations are that dimensional lumber and sheet goods will settle back to some semblance of normal by the end of the year. Engineered lumber still has some challenges with it, as one of the major suppliers recently announced they’re exiting out of the industry, so supply will likely remain a challenge for a while yet. Overall, we’re seeing major declines in lumber pricing, which has been the single biggest challenge for home builders in recent months.
We’ve seen price increases to most other materials as well; drywall, plastics, copper, etc., but not nearly to the degree of lumber. There is some offsetting good news in all of this; the real estate market along the Front Range in Colorado (along with the vast majority of the rest of the country) remains very robust, so most of our clients are finding that as our costs have risen somewhat, so has their equity. While this is not great news for the first-time homebuyer without equity in their current home, the first-time homebuyer still has the opportunity to take advantage of mortgage rates that continue to remain very low.
The market forecast for the Front Range continues to show solid growth, and by all counts, continues to be a solid long-term investment. When I’m asked if now is a good time to build, my answer continues to be an unequivocal “YES”!
Lead times for materials continue to be a challenge but by no means insurmountable. We’ve adjusted to new procurement times, and our build times continue to remain some of the shortest in the industry, and we’re still able to offer fixed-price contracts.
One of the great opportunities that COVID provided us was opening our eyes to the use of video conferencing. This has greatly increased the efficiencies for both Paramount Homes and our clients, especially as it relates to working with our out-of-town clients on plans; the ability to share a screen and walk clients through a set of plans has been nothing short of awesome!
I hope you found this helpful and encouraging. Feel free to reach out to us for any reason. We’re here to help!
Mike Rice is a general contractor based in Colorado Springs, Colorado, specializing in building custom homes. He has 30 years of experience in the construction industry. Originally from California, he moved to Colorado with his wife and three sons to seek out the natural beauty and high quality of life we enjoy here. Mike is licensed as a builder in El Paso, Teller, and Douglas Counties and would love to build your dream home. Contact him today at (719) 331-4116 to learn more.