Material and Labor Costs
Real Estate developers and architects have been facing some of the same issues during the pandemic, the costs of materials are at an all time high. However, lately, it has been trending that some costs have began to decrease, lumber being one of them. High lumber prices have caused the average price of building a house to go up at least thirty thousand dollars extra.
Though lumber costs are dropping, it could still be some time for building costs and home prices begin to drop as well, according to Omer Barnes, an expert in real estate development. Costs of materials are still higher than prior to the pandemic. Wholesalers are the only ones seeing the drop though, each dip on the wholesale side can take weeks or even months to show in store aisles. Many developers and architects hold hope though, with the decreasing costs in lumber, it is believed to be a reliable predictor of other costs dropping.
Materials are not the only issue of price when it comes to real estate development. Labor has been scarce since the shutdowns during the pandemic. Once companies started to reopen, labor has been in a huge demand, in almost every industry. Many businesses claimed they had to increase wages just to get applicants in, meaning inflation in their own prices to be able to even afford the increase. With labor shortages, the severe issues of lack of supply and skyrocket demands, inflation pressures across most of the economy.
As lumber costs slowly come down, developers and architects have hope that the inflation will start to decrease as well. Even homeowners that opt for do-it-yourself projects are waiting on the rebound supply and cost drops. Home buyers looking to build or redevelop are still halted in their processes.