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Skyrocketing costs of lumber, materials disrupt Savannah homebuilding

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Home buyers who have been waiting years to build their dream home have to put their plans on hold for even longer – not because of financing or other mortgage difficulties, but because of wood and material costs.

Jenny Rutherford, a local real estate agent, said she’s already worked with clients and scoured the record-low inventory of the property market for existing homes, but those who choose to build are not much relief either. In fact, it’s just the opposite.

In the past year, the prices of residential building materials, especially lumber, have risen to record highs, which disrupts construction and delays buyers or costs them entirely. A combination of staff shortages in the sawmills and persistent demand is the culprit, according to builders in the region.

More:Savannah real estate market: sellers cash in on low inventory, low interest rates

More:What it Costs to Buy a Home in Savannah, Tybee, and Pooler: See Average Prices Compared to 2020

The price of wood, which historically stands at $ 300 per thousand board feet, peaked at $ 1,607 this May. Although that number has since dropped to around $ 600, it’s still double the pre-pandemic number.

Rutherford, who was drafting plans for her own home on the south end of Tybee Island, said construction costs tripled in less than a year, which practically put her plans on hold.

“It became unrealistic to build the house I really wanted,” said Rutherford, who hoped to create a space to raise a family. “I predict it will be five years before we build.”

According to local builders and national trends, she is just one of many home buyers choosing to wait and see, which shows a 9.5% decline in home production.

“Despite cheap interest rates, there are definitely a lot of people waiting on the sidelines,” said Matthew Johns, a local contractor.

Ordinarily, he said, three-quarters of his clients would actively switch to construction after buying property, but now “those numbers are likely upside down”.

“New construction is always a premium, but it’s reached a point that most people can’t justify at this point,” said Johns.

Material cost price for homebuyers

New housing projects are underway in the immediate vicinity of Cottonvale Road.  The wood prices have led to an increase in construction costs.

Another important material that is contributing to the already sharply rising costs is Oriented Strand Board (OSB) – compressed particle board used to clad walls, floors and roofs – the price of which has increased sevenfold in the past year and even continues to be used as sawn timber rises falls, according to Bloomberg.

Copper wire also went through the roof, said Jerry Konter, vice chairman of the National Association of Home Builders (NAHB), which also oversees builders in Savannah.

But while other inputs could have increased by 10 to 15%, wood and OSB remain the outliers, said Konter.

“When lumber reached its peak nationwide, with an average house size of $ 300,000, the cost of the house went up by as much as $ 36,000,” said Konter, “and that’s just wood based.”

According to a 2021 NAHB study, prices will rise for every $ 1,000 for 191 households in the Savannah area. The income required to qualify for an average home price of $ 309,020 is $ 70,810.

More:First Home Buying in a Hostile Market: Savannah Agents and Buyers Share Helpful Hints

More:Soaring house prices are compounding Savannah’s affordability crisis

“They’re pricing a particular business group,” said Matthew Byrd, president of the Home Builders Association of Greater Savannah, “that’s first-time home buyers, people who have long rented and worked on their credit, and the general workforce.”

Byrd points to the numerous economic development projects, such as the industrial park in Effingham County, the Amazon facility in Pooler, and the North Bryan County development approved in May that is expected to add more manpower.

“When you add $ 25,000 or $ 35,000 for a house, it prizes a lot of the people who will fill those positions and jobs,” Byrd said.

Burden on the housing industry

Framers work in a new house being built on Cottonvale Road.

Ultimately, the costs are all passed on to the consumer, Konter said, but right now home builders are also suffering because some didn’t raise prices as quickly as production costs went up.

“If you’ve written a contract and then frame the house three months later, you’ll incur additional costs of $ 15,000 to $ 30,000 as agreed,” said Konter.

If you add $ 36,000 to a $ 300,000 home, that’s more than 10%. According to Konter, most builders work with a gross profit margin of around 15%. He says his margins have been reduced by 5% to 6%, which has resulted in him temporarily ceasing sales.

“We have a limited number of tickets and the only thing you need to have on the path to success is your ticket inventory,” said Konter.

In some cases, builders had to stop construction in the middle of the construction phase, either due to canceled contracts or delivery delays, and left framed houses for an uncertain period of time.

The wild unpredictability has resulted in more home builders than ever including a price clause or an escalation clause in their contracts, said Meagan Mowry of Integrity Real Estate.

The terms of the clause are negotiated between builders and buyers and offer both sides protection against costs and termination options.

“This is the first time in my career that all of these builders have had to apply a price clause because the costs were a rampant freight train there for a while,” said Mowry, who has been in the real estate industry for 17 years.

A broader look

But contrary to all evidence, overall construction hasn’t slowed down as much as you’d think, local brokers and builders said. That’s because for the most part, demand exceeds supply.

“People from major metropolitan areas like New York, New Jersey, and California … have chosen to move to the area now that their jobs are gone,” Mowry said.

Those who can afford it buy. She says builders have for the most part been able to regain lost profit margins through higher prices, higher volumes, or both.

“But the person who has not recovered and is perhaps suffering the most is the first-time buyer from the Savannah area,” she said.

The trickle down effect is also severe.

“What happens when you can’t afford a house? You rent, “says Konter,” the rise in the multi-family market is ultimately reflected in rental prices and if we have an affordability crisis to sell heavily, we are currently facing an affordability crisis. “

Nancy Guan is the general reporter for the Chatham County communities. Reach her at nguan@gannett.com or on Twitter @nancyguann.

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Celebrating 40 years in Taos Real Estate | Success Stories

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Louise Rose is just as individualistic in her attitude as she is as an independent Taos broker. This combination has ensured that it successfully brings clients together with the home, land or investment of their dreams.

Before Louise moved here, she was a stockbroker with a NYSE firm. She raised her sons Justin Bailey and Andrew Morrison, who graduated from the eclectic and distinguished Taos High School. “Children who grow up here are well prepared to live anywhere in the world.”

Louise is blessed with loyal clients who appreciate her upbeat approach, ability to listen, and insane sense of humor.

“Finding someone for the perfect home or ranch is the most personal transaction they can have,” said Louise. “It’s worth finding exactly what you’re hoping for. To get to know a customer, you have to listen carefully. Especially if you come from outside the city, it is important to understand exactly what attracted you to our unique and fascinating heart and soul of the Southwest. “

It’s an intuitive process that takes countless hours with people of many languages, cultures, and ethnicities. Often times the first home she shows them is the one they choose.

“Show them what they want; not what other customers desperately want or need to sell unless it’s the perfect thing. That saves everyone a lot of wear and tear. “

Louise has lived in Taos since 1973 and has seen many changes. She believes that no matter how many people move here, the spirit and essence of Taos never change.

In 1982 she carried out the first “Realtor Tours” together with another broker. Within two years, the brokers were ready for a multiple listing service (also known as MLS). Customers finally got the benefit of knowing that the home they were buying was the best choice for them and they no longer had to go to every real estate agent in town to find out what was for sale.

In 1985 she and two other people brought the first real estate franchises to Taos. Louise sold her successful ERA Taos Realtors in 1991. Three years later, she bought the Realty World, Taos franchise and then sold it to work independently.

With the market hot today, her boutique business is in demand through word of mouth and referral.

Louise said, “I personally rarely go to a doctor or lawyer for advertising because the most experienced and talented are as busy as they can get. When I do advertising, it is to the benefit of my salespeople, so that they get the attention. ”

Her longstanding clients include the Comptons: Mike, a successful commercial high quality contractor, and Jane, the Taos optician, whose first appointment is in early October.

Louise sold the Comptons her first Ranchos home, the first they looked at; and then 20 years later she sold it for them to the first buyers who looked at it.

The new doctor, his wife, and their poodle lived in a motel and needed a place to stay immediately.

Two weeks later, the Comptons were out with their two young daughters, four horses and three dogs.

The Comptons are currently selling Taos Creek Cabins, which can be seen in the pictures with Louise on this page.

Pat Allen, another longtime Taoseño and owner of 9 to 5 Ship & Print, said, “I remember the first house Louise showed me was the one I bought. It was the easiest purchase ever. She is still my broker after 30 years.

Louise’s pink, white, and black property signs are eye-catching. Each carries a reminder, “Please don’t disturb the owner,” a thoughtful touch that embodies both the agent’s signature personal style and savvy business acumen.

Louise has enjoyed a life of world travel and adventure and, when she’s not selling real estate, is working on a book. If you are a happy new customer, she will pamper you with stories and you will instantly connect with this powerhouse of energy. They know that you made the right choice in choosing your broker.

“The last decade has been the best of my life and I’ve been happier than ever,” she said. Share your enthusiasm and let Louise Rose help you find the home that will make you happier than ever.

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Tucker Carlson exposes real estate companies ‘wrecking’ America

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“Gavin Newsom is turning the state of California into a swamp,” said Fox News host Tucker Carlson on Tucker Carlson Tonight.

TUCKER CARLSON: In addition to all of the other problems California has, property prices are higher there than anywhere in the country. The average home price in the state of California is now over $ 800,000, more than double the national median. In the past few years, California leaders have passed dozens of laws that they claim will fix the problem because it really is a problem. Governor Jerry Brown, the last man, signed 15 housing laws in 2017 alone. Last year, Gavin Newsom signed 18 separate housing laws. Did it work? No not at all. They didn’t work for the people who live in California. But they weren’t intended for people who wanted to buy houses. Instead, these bills had one purpose: to destroy suburban houses and replace them with high-density apartments. Of course, real estate developers make more money when single-family houses are leveled and replaced by multi-family houses. And real estate developers happen to be the main donors to the California Democratic Party, and Gavin Newsom in particular.

Real estate development company Marcus was one of Newsom’s largest funders in the recent recall election. This week, after surviving the recall, Gavin Newsom tragically rewarded these real estate developers with the largest housing bill ever. Newsom has just signed a series of laws, SB9 and SB10, that will abolish the suburbs in the state of California. The state that invented the suburbs. These bills were approved by the California Building Industry Association, which, citing, “represents the interests of home builders and developers of residential and commercial projects. There will be some new commercial projects in the California suburbs.” As the New York Times put it, you quote, “SB9 essentially ends the single-family zone zones.” Property owners now have state approval to convert any single family home in the state of California into a 4 unit apartment complex. How does this improve someone’s life? It will not. It means demolishing houses to build rental units.

At the behest of his donors, Gavin Newsom is turning the state of California into a swamp. It’s not just happening in California, Oregon recently passed a nationwide ban on single-family home zoning. That’s crazy! Cities like Minneapolis and Sacramento have started allowing apartment buildings on single-family lots. Crowding problem anyone thinks? By the way, only the Chinese government seems to be doing everything possible to rule the real estate developers. “Housing should live and not for speculation,” said the Chinese president. Woo, I hate to quote the President of China but in this case he’s right, one of the largest and most indebted real estate companies in the world is collapsing and China has signaled that it will never be interested in a bailout again. In this country, real estate companies not only get bailouts, they can also write laws that destroy your neighborhood. And in many parts of America, they can tear down the neighboring house and turn it into a residential complex. Big!

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Real Estate News

Crow Holdings Announces Closing of Ninth U.S. Diversified Value-Add Real Estate Fund with Approximately $2.6 Billion of Investable Capital

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DALLAS – (BUSINESS WIRE) – Crow Holdings, a leading national real estate investment and development firm, today announced the definitive closing of Crow Holdings Realty Partners IX, LP (“Fund IX” or the “Fund”). Managed by Crow Holdings Capital, Crow Holdings’ investment management company, the fund invests in value-adding real estate investments in the United States, primarily in industrial and multi-family homes and specialty sector opportunities.

Fund IX was oversubscribed with approximately $ 2.3 billion in commitments, above its original ceiling of $ 2.0 billion, and received strong support from existing investors and significant participation from new investors, including global banks and Insurance companies, pension plans, family offices and high net worth individuals. The fund has also co-invested a total of $ 265 million in equity, resulting in total investable equity of approximately $ 2.6 billion for the strategy. Fund IX marks the company’s largest fundraiser to date and is a significant increase over the $ 1.3 billion pledges raised for the previous fund.

The fund focuses on diversified value-add investment and development opportunities in multiple property types in major US markets. Today these possibilities exist mainly in industrial and multi-family houses as well as in special sectors such as prefabricated houses, comfort and gas, self-storage and student dormitories. The fund was fully launched during the Covid-19 pandemic and began investing during this challenging time as well. To date, more than 63% of the fund’s capital has been invested in 62 investments, primarily in the high-growth regions of the Southwest, Southeast and Mountains of the United States

“We appreciate the trust our investment partners have in the continued ability of our team to deliver results to them,” said Michael Levy, CEO of Crow Holdings. “This successful degree shows recognition for our company’s long-standing track record, real estate expertise and, in particular, for our early recognition of the considerable tailwind behind the demand for logistics and e-commerce, the changing population demographics and changing housing preferences as an integral part of our differentiated investment strategy . ”

“With more than 63% of the capital employed in Fund IX, we are already achieving strong investment results, including the repatriation of capital at the beginning of the fund’s life cycle through rapid realizations. This achievement is recognition of the team who have worked hard during this unprecedented and challenging time to continue fulfilling our commitment to all partners, ”said Bob McClain, CEO of Crow Holdings Capital. “We believe that our pipeline – particularly in the industrial, multi-family and specialty sectors – will continue to offer attractive opportunities to grow results throughout the life of the fund.”

Hodes Weill Securities, LLC acted as placement agent for Fund IX.

About Crow Holdings

Crow Holdings is a leading national real estate investment and development company with 70 years of operations and $ 21 billion in assets under management. With a strong track record across property types and market cycles, Crow Holdings pursues unique investment opportunities through a range of strategies and risk-return profiles, creating value for its investors, partners and communities. Operating out of 17 offices in the United States, Crow Holdings has extensive industry reach with expertise in multi-family, industrial, office and specialty sectors and has developed or acquired more than 225 million square feet. Our core principles of partnership, collaboration and reconciliation of interests remain central to Crow Holdings today. More information is available at www.crowholdings.com.

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