When it comes to buying VS building, some aspiring homeowners are seeing their options become increasingly dictated by changes in the market. As for now, there are three major factors affecting the Buying VS Building debate in our industry. In no particular order, they are housing inventory shortage, material costs, and a labor shortage in construction.
If you’re reading this blog post, you’re probably already well aware of the housing inventory situation in your area. For material costs, it goes beyond lumber. Rising prices on everything from windows to drywall, and a shortage of availability means that costs are up as builders are buying whatever they can get their hands on. The labor shortage is more complex than simply a shortage of total workers - which there definitely is. Skilled labor is lagging behind, and the average age of construction workers is going up. ABC reported that the industry will need to hire 650,000 additional workers to keep up with demand, on top of normal hiring this year.
Now, what does this mean for you? Well, it depends.
Even though headlines about timber prices and material shortages are common, that doesn’t mean that construction is off the table (for the aspiring homeowners). It’s worth having the conversation with your borrowers because depending on their timeline and stage of life, building might still make a lot of sense. Regardless, it’s up to you to keep an eye on your local market and to stay up to date on which products you can offer to your borrowers. That being said, we do recognize that it is difficult for LOs to compete with builders in the loan department because of the huge discounts they sometimes offer, but hopefully, you still find this information helpful.
If you want to go deeper:
Construction Industry Faces Workforce Shortage of 650,000 in 2022
Opinion: The “profitless boom” in residential construction