The Expert Podcast

• The construction industry is pulling back on the volume of new builds, affecting both the construction and real estate markets.
• Home prices have risen, driven by higher interest rates and significantly increased construction costs.

• Lumber prices, which spiked dramatically, have come down from $1500 to around $650-$700 per thousand board feet, but other building costs remain high.
• Key components of home construction such as windows, roofing, plumbing, electrical work, doors, sheetrock, cabinets, and flooring contribute to the rising costs.
• Lumber typically accounts for about 25% of a home's construction cost, including labor.

• Builders are pulling back on the number of houses being constructed due to the rising costs, with many unable to sell new homes for enough to cover construction expenses.
• The shortage of inventory, combined with the demand for homes, has driven up prices for resale homes, as these properties no longer reflect the soaring costs of construction.
• Supply and demand have led to multiple offers on homes, but there are still fewer homes available than there are buyers, sustaining home prices at higher levels.

• Home prices in some neighborhoods have risen significantly (e.g., from $350K to $750K or $800K), although some recent prices have started to adjust downward slightly.
• Interest rates have increased from 3% to around 5-6%, affecting affordability for buyers.

• A continued shortage of homes is expected, with experts estimating a deficit of 5 million homes.
• The construction slow-down will further exacerbate the problem, leading to a housing crisis over the next few years.
• As population growth continues and new households form, there will be increasing demand for homes, but fewer homes will be available.

• The pullback in construction is expected to last for at least a year to a year and a half, making the housing shortage even more acute by 2024-2026.
• While prices may soften slightly in the short term, the ongoing housing shortage will keep prices elevated in the long run.

• The housing market may experience some short-term adjustments, but the overall shortage of homes will lead to rising prices in the coming years.
• Builders remain cautious due to lessons learned from the 2008 crash, but this caution will lead to fewer homes being built, contributing to the ongoing housing crisis.

• Share your comments and opinions on how you see the housing market unfolding in the coming years.