There are dozens of factors that impact the housing market. As housing prices skyrocket, the cost of building materials has risen simultaneously. If the price variations weren’t as drastic as they have been in the last few years we probably wouldn’t notice how the cost of building materials has affected the housing market as readily as we do.
Increased building material prices contribute to a decrease in affordability
Increased prices on lumber, steel, copper, and all the other materials that are required to build a house ultimately affects all corners of the housing market. Now the more expensive the supplies are, the fewer renovations, repairs, and new builds. As profit margins shrink so do the incentives for builders and developers. Increased prices are going to slow down and even put a stop to a lot of these renovations and new builds.
Currently, the US is suffering from a nearly 4-million home shortage compared to the market demand. With 4 million more people looking to buy homes, it’s no wonder that houses are selling way over market price. Since spring of 2020 the price of lumber has skyrocketed and the cost of single family homes has risen on average by $30K pricing out a large majority of first-time buyers.
Decreasing prices doesn’t always lead to an increase of affordability
On the other side, as the country continues to reopen and production increases we’re seeing the costs of the building materials start to go down. But, it’s still going to take a while before we see the housing market ease up. The delayed growth that the increased prices caused isn’t going to be corrected as quickly as the damage was caused. Especially because building material and labor costs aren’t the only things affecting the housing market.
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As you prepare to close on your house remember we are experts in the field of Georgia Real Estate Law. If you have any questions or concerns don’t hesitate and give us a call! At Frank B. Pallotta Law we are licensed Real Estate Lawyers with 20 years of experience helping our clients in Georgia navigate the closing process. Reach out to us with your questions. We’re here to help.
