SALISBURY – As the pandemic spread across the country last year, the local residential construction market was calm.
“On the construction front, we have stopped building and the phones have stopped ringing,” said Jonathan Coarsey Wallace, a local real estate agent who works closely with Rowan County home builders.
Then, with mortgage rates suddenly lower than they had been in decades, the floodgates opened.
“All of this demand came on board and it was really hard to keep up,” said Coarsey Wallace. “Once the pandemic was in full swing, people wanted to buy houses. “
People didn’t just want to buy houses, they wanted to build them.
“Every builder has been overwhelmed by it all,” said Tony Finney, of Mooresville-based Finney Builders.
The residential construction boom continued into 2021. The construction rush, combined with the shortage of supply and labor, resulted in rising prices and challenges for home builders. Even though the custom home market appears to be slowing down slightly, local builders have overcome and bypassed hurdles such as higher lumber costs and delayed delivery dates to build new homes.
The recent resumption in residential construction sounds familiar to Adrian Pruett, Rowan County’s environmental health manager. One of Pruett’s responsibilities is to oversee the county’s soil inspection program, which for many builders is one of the first steps in building a new home that requires septic installation.
Pruett has been inspecting sites since the mid-2000s, this is the last time he remembers building houses in the current clip.
“From what I see, we are in a boom,” Pruett said. “Talking with everyone, and I still have friends in the private sector because that’s what I was doing, they can’t keep up. They are four weeks late in trying to keep up. It reminds me of 2006.
There is usually an increase in new construction in the spring, Pruett said. This means the county’s soil assessment staff are working at a breakneck pace in March and April. But this year’s rise began even before the weather got warm.
“You were seeing 66 (soil site assessment) requests in January, so it started very early this year,” Pruett said.
The ministry received 52 requests for soil site assessments in April and 68 in May. Not all floor assessments are for a new home, but Pruett said new residential construction makes up the majority of requests.
Demand for home construction in Rowan County has persisted despite higher home prices, which is in large part a result of the high cost of wood.
“We have seen lumber increase by about 200 to 300%,” said Coarsey Wallace. “A house I was building last year in a development outside of Salisbury, we are now selling these houses for an additional $ 100,000 and our profit margins have not changed. We’re still making roughly the same profit margin, but actually a little less because we’re still trying to find homes for people.
The cost per thousand board feet hit a record high of over $ 1,500 in May, pushing some people out of the market.
“There are people who just can’t afford to build right now because of the cost of lumber,” said Lori Burke, managing director of Salisbury-based Porter & Cress Builders.
Due to the rising prices, Burke and his team had to get creative when planning homes for clients. Burke said the company has found ways to cut lumber costs by reducing the size of homes or using prefab roof trusses instead of framing a roof with rafters. Using trusses for the roof structure leaves less space in the attic for the homeowner, she said, but can reduce the overall price of the home by $ 8,000 to $ 15,000. And with costs being what they are, small tradeoffs are more common.
Wood is not the only factor that has pushed up the price of homes.
“You name anything in a house and there’s nothing that has gone down in price,” Finney said.
Everything from appliances to accessories and finishes has gone up. In addition to the higher prices, some local home builders have seen wait times for materials lengthen during the pandemic. Waiting for windows, door trim, or other home components delays the whole process.
“If I don’t have any delays in the products, if I have a full workforce and the time cooperates with us, I can build these houses in four months from the time I put the foundations, ”said Coarsey Wallace. “If we take three months to get a contract, permits and stuff like that, you envision six to seven months from when you sign a contract to when you move in. These same houses now I tell people to get ready for 10 (months).
Some potential buyers have decided to wait completely to build their dream home.
“I think some people are waiting to see what the wood is going to do,” Burke said. “I have several clients on a list now. “
With the demand for new homes declining somewhat, along with other market factors, lumber prices are starting to come down. The Wall Street Journal reported last week that futures contracts (agreements to buy or sell a commodity at a fixed price) on lumber for July are down 41% from early May. Even though the cost of wood may continue to drop, home builders are not counting on anything.
Burke said she was asked almost daily about the future price of lumber. His answer is always the same.
“I would like to say, ‘Yeah, it’s going to go down. Build, build, build. ‘ Burke said. “But I do not know.”
Finney said he expects lumber prices to continue falling, but doesn’t think there will be an immediate impact.
“My suppliers tell me that lumber, and you can see it on the futures report, that prices will drop in the fall, but we’re looking at October before we start to see those increases statistically,” Finney said.
With uncertainty lingering in the homebuilding market, Coarsey Wallace said those considering building a home should not sit on the sidelines, scared by reports of higher costs.
“You’re always going to look back and say, ‘Dude, I should have done this in 2020,’” Coarsey Wallace said. “Now we are in 2021. If this is the house you want and you have the money for it, you should start planning now. “