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Rising Home Prices, Supply Chain and Higher Interest Rates…oh my!

Categories: Blog, Purchasing a New Home, Tips | Posted: March 4, 2022

Buying a home in today’s real estate market is not for the faint at heart. Guess what, neither is building one! Buying and/or building a home is hard right now for both homebuyers and home builders. Everyone has their own perspective and hurdles to get through. Here is a little round-up of some hot topic items I’m sure you are already hearing about; rising home prices, supply chain, and higher interest rates.

  • Let’s start with rising home prices. Our world is new homes, so we will focus on that part of the real estate market. It really boils down to two things…. cost of material and availability (aka supply chain…more about that in a minute). Builders are paying more for material and labor and therefore the cost is manifesting itself in the sales price. Every cost that goes into putting a home on the market for sale has increased. Things you might not think about… wages, regulatory fees, development services, lending cost, and the price of raw land. Then you get to lumber, plumbing fixtures, siding, flooring, concrete, etc… Some estimates we’ve read have said building material costs are up an average of 35% since this time last year. Every sector of the housing market, from renters and first-time homebuyers to move up and luxury homebuyers are paying more for a home.
  • Next up is the buzzword of the hour – supply chain. Is anyone else tired of that term? Material availability and when the materials are on hand is a daily job to manage. The Ivey Homes team is working very hard to plan and adjust quickly to help still get homes built and closed. This requires a big-picture outlook and a lot of patience because guess what, most experts say we will be dealing with the global supply chains issues well into 2022. Hang on!
  • Now the new member of the trifecta, higher interest rates. Industry experts have been saying for a while now that rates will begin to increase and over the last year they have increased from 2.7% to 3.7% in a year. Most experts say we will be at or over 4% by July this year. What is a new homebuyer to do? Our advice is to buy sooner than later. As interest rates increase your buying power will lessen potentially forcing you into a home type you initially weren’t looking for. Here is an easy example: If you could afford the monthly payment of a $355,000 home at a 3.0% interest rate, the equivalent payment at 4.0% is for a $308,000 home. There are also rate lock programs available from lenders. This can give you a little peace of mind as you wait for a new home to be completed.

It is not all doom & gloom. Experts also say that for all the woes we are facing, the other market indicators are strong. New and daily challenges are the norm, but as a company, Ivey Homes is committed to still bringing a better-built home to the market for our customers. Our team is ready to help navigate and guide you through the process of buying or building new. If you have questions or are ready to get started, please Contact Us! Ivey Homes has a dedicated online and in-person team available. Browse Ivey’s communities and homes – here  

 

 

 

 

Ivey Homes is a leading new home builder in Evans, Grovetown and Augusta, GA, and North Augusta, SC, with townhome and single-family home pricing ranging from the $200,000’s to mid $400,000’s. For more information about living in or building a new home in Columbia County, Richmond County, or Edgefield County, visit iveyhomes.com! Connect with us on our Facebook page and Text: IVEY to 77848 for convenient updates.

New Home Pricing Increases and Your Buying Power

Categories: Available Homes, Blog, Build Your Home, GA, Home Ownership, News, Purchasing a New Home, Tips | Posted: January 10, 2022

new homes prices, buying power, increases interest rates, lumber prices, Ivey Homes

A New Year always brings on the excitement of new goals and resolutions! For home building, as 2021 was winding down, we thought we saw a light at the end of the ever-changing “tunnel,” but not so fast. There are still lingering supply chain issues, lumber pricing, and interest rate increases that are affecting new home pricing and your buying power.

Let’s talk lumber:

In the last week of 2021, the home building industry saw the largest one-day spike in lumber cost.  According to tradingeconomics.com’s commodities index, lumber is up 40.5% this month and 32.75% for the year. For comparison, the next closest monthly spike in the “agricultural” category is coffee, up 12%.”

The framing lumber for a new home is the single largest item needed for construction and has pushed pricing on homes that are not framed in every Ivey community. Currently, base and inventory homes pricing are being monitored and adjusted on a weekly basis. Jay Frye, Ivey’s Purchase & Estimating Manager, said, “We’ve seen increases in cabinets, drywall, gutters, and siding… almost anything with metal,” Frye said. “The first of the year always brings increases, but the demand just still far outweighs the supply.”  Jay went on to stay, “On Trading Economics, it’s showing that lumber will continue to go up and be really high until maybe October,” Frye said. “And even then, the plateau will still be much higher than what we’re paying now. They just can’t make the product fast enough.”

To help alleviate some unknown pricing changes for our homebuyers, Ivey Homes started offering homebuyers more forecast pricing due to the rapid changes. This pricing, while higher, is set once the contract is signed. Ivey forecasts a sales price depending on the pricing trend. This allows Ivey to continue to build homes and gives the buyer peace of mind.

Supply Chain Woes:

The beloved supply chain we’ve all received a crash course in continues to delay items needed to build a home. One of the largest items is windows. Current window orders are taking 12-14 weeks to deliver. Windows are key due to getting the framing complete and passing all the local county inspections. The home gets to a certain point in construction and it must stop until the windows are installed.

At the end of the home’s construction, should a window be broken or need replacing, this can also delay construction due to the large lead time on this one item. Supply chain woes are not the only item itself, the truck drivers to get the product here are in short supply and then the labor to install the product. Talk about a domino effect!

Newest to the mix… interest rate increase:

Those watching the housing market have heard the rumbling of increased mortgage rates since the middle part of last year. We knew it was coming and well…. here we are! The first few weeks of 2022 saw an up and down with rates forcing lenders to scramble to lock in rates. An increase, even small, will affect a buyer’s buying power, pair this will the increases in housing and building prices, it becomes a double whammy!

Best advice… buy now and do not wait. Rates and prices will continue to rise and the dream home you have been eyeing could cost you more next week.

 

If 2022 is your year to make a move Ivey Homes would love to help guide you through the process. Connect with us online www.iveyhomes.com/contact-us 

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Ivey Homes is a leading new home builder in Evans, Grovetown and Augusta, GA, and North Augusta, SC, with townhome and single-family home pricing ranging from the  $190,000’s to mid $400,000’s. For more information about living in or building a new home in Columbia County, Richmond County, or Edgefield County, visit iveyhomes.com! Connect with us on our Facebook page and Text: IVEY to 77848 for convenient updates.