While the markets have been jumpy recently, and whether the Federal Reserve raises rates any time soon, there is one thing we’re certain of: if you’re on the fence about deciding whether to build your home now or later, we highly recommend you not delay. There are many factors that go into the cost of building a home, and unfortunately, as of 2018, all of them are currently contributing to an increase in building costs. There are three main reasons why:
1) Since late 2017, the shortage of construction labor has grown to an all-time high. This means it’s getting harder to schedule skilled trades such as framing crews, carpenters, bricklayers, concrete workers and more. Once the trades start getting overbooked like this, the companies that perform these aspects of home building begin to raise their prices accordingly. The longer they’re booked, the longer your wait, and the higher the potential cost of your build. You can read the NAHB’s article on the labor shortage here: Builders Report Labor Shortages on the Rise.
Chart showing growth in labor costs and availability (Image Credit: http://eyeonhousing.org)
2) With natural disasters such as fires in California and Hurricanes on the gulf coast, there’s a shortage of building materials, and also a corresponding increase in the cost of those materials. Lumber, gypsum (drywall), piping, and more are all in greater demand, and often times the building materials will be sent from all over the USA (and the world) to the areas that need them most for reconstruction. What does that mean for building a home in Colorado Springs? It means the longer you wait, the greater the potential of price increases as building materials are shipped to areas with natural disasters.
For example, here’s a quote from a news article published late last year: “In the past 45 days, there has been an increase in lumber prices due to the fires in the Northwest. A couple of the large producers in the Northwest have shut down because of that. So, just leading into the hurricanes, we had a little bit of spiking in pricing.” Read the full article here: Hurricanes, Wildfires Cause Spike in Construction Costs.
3) Finally, the Federal Reserve does indeed make decisions that drive up the cost of building by increasing rates. Rate increases result in more expensive rates of exchange for nearly everything, including the cost of a construction loan and mortgages. For several years, the Fed’s rate has held at a steady low. However, since 2016, it’s been increasing slowly but surely. If you want to get the biggest bang for your buck, the best option is to start building sooner rather than later and lock in your rate now.
So, does this mean you should panic and start building immediately? Of course not. However, if you’re already thinking of building, history has shown that all three factors outlined above result in higher home building costs.
So if you’re waiting, what are you waiting for? Contact us today, and we would love to talk to you about building your dream home right here in Colorado Springs.
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If you live in or around Colorado Springs, we would love to build your dream home. Simply contact us today to request a quote or schedule a visit to our showroom to meet with our design team.