The Expert Podcast

Now we've all heard about the supply chain issues and even lumber prices going up, but that lumber price increase has put the level of affordability for home buying out of reach for many Americans. So that extra 30 or 40,000 worth of lumber might put that house out of reach for a home buyer, and that might not seem like a big deal because it might be marginal, but look at it this way: for house hunters that means an average of $36,000 on the price of a house. Well, if the median price of a house is about $350,000, that's more than 10 percent increase in the price of a house, and this has gotten even worse since the article came out.
The home builder that was quoted in this article says "I can't tell anybody how much a house is going to cost because the lumber prices are changing so fast that in a week or a month or two months the lumber package might even be higher." Another factor is that people are leaving big cities and buying homes in the suburbs. Well, suburb property main construction is a bigger footprint, more lumber, more square footage, so that house might take two times the lumber package than an in-town duplex or townhouse where you have a separate single-family dwelling. Even zero lot line, it's gonna take almost twice the lumber as a townhouse, and that's also pushing up the price of new home construction.
The other quote from a builder said lumber prices are clearly unsustainable. Well, that proved not to be true. This article came out earlier in 2021, since then the lumber prices have gone back up even more, and they're still building houses as fast as they can and they're selling as fast as they can. Home builders are holding back production, and that's making fewer properties available for buyers. Even if it's fewer properties available for a move-up buyer, that will make an entry-level home available for a different buyer.
The lumber price by itself isn't so much an issue; it's more of what it's doing to the margin of available homes for home buyers in every level of the market, whether it's entry level, mid-level, or even upscale homes. The lumber availability and lumber pricing combined with the supply of workers that can build these houses is keeping the home market being chased by buyers, where if you're a buyer, the fastest that you save money and increase your budget, the home price is accelerating faster than you can increase what your budget's going to be or what your down payment is going to be.
Building a new home may be a way to go because even though the price might be higher when it's completed in a few months, what you might find is the savings by doing a self-contract or doing your own general contracting management of the home price. You might save enough money to offset the increase that could happen within that year.