Why is building so expensive
Are you feeling like it’s nearly impossible to find any new construction for under $500,000. Sadly, you aren’t just looking in the wrong place or are unaware of the under $500k options. New construction pricing is at an increased rate with fewer and fewer homes hitting the lower end of the pricing scale. But why?
There are a collision of reasons why the cost to build a new home are continuously rising. 2020 impacted the supply chain of many materials used in new construction - appliances, windows, the petroleum used for carpets, lumber, etc. - and while the production of these items is starting to catch backup we are now also hitting a supply problem on the availability of land, contractors, and available new homes.
The Facts
• Richmond remains in a new home supply deficit;
• 50% of new renters are coming from outside the Richmond market, meaning we need more housing inventory than initially planned;
• Resale inventory remains historically low, furthering demand for new construction;
• The pipeline of new residential communities is decreasing throughout the region as land availability decreases;
• Historically, interest rates are low and home buyer traffic remains stronger than the first quarters of 2017, 2018, 2019, and 2020;
• We need more communities both approved and developed (the pipeline of approval is slow within the counties.)
We’ve run into a basic supply and demand problem but on multiple fronts here in Richmond which is driving new construction home prices in multiple ways. Hope is not completely lost though! There are options below $500,000, but they aren’t the homes of the early 2000’s building boom or the houses flooding your Instagram feeds. If you’re willing to adjust your expectations of what $500,000 can buy you, there are some amazing options out there!
I recently had a buyer come to me with a budget of $400,000. They knew they would likely need to be somewhat outside the city and gave me a parameter of a 25 min drive max and a minimum of 3 bedrooms and they otherwise kept their search criteria flexible. I found multiple options in the low to mid-$300’s, both single family and attached townhomes, to show them.
I know it; I wish someone had told me about 10 years ago that the time to build was NOW. Like, Right 👏 now 👏! Because prices were all going to increase rapidly and availability would decrease just as fast. So, I’ll be that person for you. I know prices seem high now, I know it feels like you should keep waiting. Based on the facts above, though, housing will continue to get more expensive. So, let’s make an investment in you. If you’re interested in knowing more about the new construction options in your price range set up your virtual coffee and let’s talk about what you’re looking for. Your new home could be just around the corner!
Your Friend,
Jess