One of the most common questions I get on a daily basis is, What are construction costs looking like? Will they ever go down?
These are great questions, and I don’t blame families at all for asking as they weigh out their options for their future. We are definitely in unprecedented times all over the country, not just in the urban downtown area of San Antonio. There are supply chain, labor, and transportation issues all over the country and even the world!
Many people have seen or heard about the pricing of lumber. At one point that number was astronomical compared to what we were used to and most builder’s were struggling to find ways to adapt to this changing situation. Although the pricing of lumber has gone down since July/August 2021 that isn’t a sign of things to come unfortunately.
Lumber has gone down anywhere from 10 – 20 % from when it was at its peak. However it’s peak was 377% higher than last year’s cost, so this 15% decrease is still 352% higher than what we were accustomed to last year. While this is still good news, there are a ton of other materials that have increased in price.
Non-renewable resources have become scarcer and scarcer in this economy and because the demand remains the same the prices have in turn increased. Metal, sheetrock, copper, labor, and appliances have all seen an increase in the past few months ranging from 5 – 15%.
Although lumber has gone down 15%, about five other items within the home have increased making this “savings” non-existent and often going over and increasing the price of the home.
Well you might be thinking, the costs are already crazy high and you are telling me that they will continue to increase? Why on Earth would I buy a home then?!?
My advice is to buy a home as soon as you can. The costs of construction are going to continue to rise, the market is still going to be moving strong and the sooner you get in the more appreciation and upside you capture!
We have a prime example at our Ira Ave Lofts downtown here in Mahncke Park. We were originally starting the 1 car garage units at 347k just six months ago. That same unit is now starting at $399k. The family’s that waited, lost out on 50k worth of equity/appreciation. That is a 15% increase in home value in half a year.
That is the power of being decisive and doing your research and buying the right home, in the right area! Do not let this market discourage you, instead let it encourage and motivate you to do what you need to do to get your dream home and reap the benefits in the future!
As always if you are looking to build, buy or invest here or anywhere in San Antonio or the surrounding areas give us a call. We would love to serve you and see what we can accomplish together!
– Michael Guzik
