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Change Making changes

Posted On: November 30, 2021 | Posted In:

I can honestly say I have never seen as many challenges or a better time to build.

Pricing is next to impossible, and I know how frustrating that is for customer as well as builders.  You may have seen our budget worksheet, we have used it for years.  We create it by looking  backwards.  For example I have a cost per square foot calculation for items like garages and decks and porches.  Each year at the end of the year I look back at the stuff I built last year, how big and what the cost of it was to create these numbers then just add about 3% for year over year inflation. This is how the building industry has always approached pricing.  This year we have seen over 25% increase in the combined cost of material and labor and still climbing.  So as you and I sit and talk about numbers for the house you want to build next spring, will cost level off? drop some? or continue to climb?  I have no idea. Which is weird.

So the question that comes up in ever conversation I have with a potential customer, ball park, how much do you think it will cost to build this house I want to build? If I answer them, there is a good chance I will be proven to be a liar.  If I lie to them, there is a good chance they will not be a customer.

 

The next question is time line.  Do you think I can be in by next Christmas?  The construction is part of that answer, If I ordered your house today, then yes.  However, we do not order a house until we finish the design, complete the specifications, come up with solid pricing and then do a contract.  That contract then needs to go to a bank, who needs to send it to an appraiser to get a value of the house before they will complete the loan. Appraisers are backed up 2-3 months right now.  Then with loan approval we need to go to the town and the county to get a permit.  Some areas are still pretty on top of things, others are really backed up. Once we have funding secured and a permit in hand we can order a house. Assuming the pricing does not change between now and then. Manufactures backlogs are changing.  If the market slows a bit this could hold at the 3 months it could be close to a normal build cycle. But if it stays busy we could see lead times in modular homes creep to 12-16 months like the Mobile home industry has.

 

So why now.  Well, my crystal ball has never been very accurate but I do know some things. Pricing never goes down, so it will not get cheaper in the future, land is getting really hard to find, and interest rates are going to go up.  So a few years from now, you will wait longer and pay more.