The Expert Podcast

Obviously it's no surprise that the home building market is all over the news and there's shortages there's building problems and the real estate price factor is going up dramatically and here's a couple things that are happening behind the scenes that not everybody has heard of yet builders are actually beginning to stop taking orders so home builders that have inventory that have lots that have a subdivision they are in some cases not taking new orders and we've also seen them canceling existing orders and we'll do another video about that in next week or so because of three factors construction costs are going up because of the lumber market labor shortages are really hitting builders hardy as a general contractor or even a subcontractor an electrical contractor or a plumbing contractor you can't get good help you can't get people that are reliable uh the people that do show up sometimes can't pass drug tests or background checks so it's tough getting help so you're having to limit the number of jobs that you take we'll talk about some ways to alleviate that if you're a builder a property owner or if you're somebody looking to buy a house.

But this is in bloomberg right this is where um financial analysts look at the market and it says as house prices are skyrocketing bidding wars are are the norm but home builders are now even getting affected by this the market is too hot even for home builders demand is so high and construction costs are climbing so quickly that overwhelmed builders are suppressing orders and shifting away from fixed prices meaning that they're taking projects instead of doing building for a customer they're building a speculation so when it's done then they'll price it and these are big builders this is dr horton and lennar the two biggest home builders in the country texas florida southern california and some it says here some smaller firms have stopped signing contracts altogether we've shut off sales until homes are nearly completed that way you'll know when it's going to be done and what the cost is going to be if you price it too soon if your building cost goes up or you can't finish it because of labor you're going to have a problem.

CNBC kind of says the same thing home construction sees biggest drop since pandemic hit here's why because they can't build them fast enough there's more people that need homes than our homes available one of our previous videos we talked about there's four or five million home backlog for the market and the reason for that backlog has to do with many things older homes aging out and not being usable more people in the marketplace and even things like zoning not allowing new construction right here 15 percent of builders say they are putting down concrete foundations and then holding off framing the house they're waiting to see what's going to happen with lumber prices what's going to happen with the market and what's going to happen with availability of labor right i have to blame the difficulty in procuring lumber and other products along with labor issues for the miss uh chief investment officer bleakly advisory group.

For property owners buying a house the housing market is a tale of two americas and first time buyers are struggling this is the result of all of this if home builders can't build new homes entry level or otherwise it's putting a backlog that ripples down through the market that makes entry-level homes not be available whether they're from the resale market or from new homes being constructed that's the result so the ripple effect the domino effect of labor availability cost of lumber and materials and even the price point of underlying lots and raw land is putting the real estate market in the tailspin that the availability is so low that people are buying houses sight unseen just to have a place to live and you're seeing that in the news but this is some of the the behind the scenes reasons for the run-up in the real estate market even though it doesn't seem like that would affect resale homes it does because somebody selling a house can't really sell something even at a high price if they don't have another place to live and not having a new home being constructed with a fixed price that you know what it's going to be puts home sellers in a bind of not being able to sell without having a solid place to land after they move out of their existing home.