The housing market in Wisconsin is booming with less than 4.2 months of inventory on the market. A typically healthy market has 6 months of inventory. Low supply has fueled a 6% increase in the median sale price. Reports of multiple offers on the first day of listings, with accelerator clauses and personal letters selling why their family should get the home are becoming the norm. Especially on homes under $350,000 and under price point. Home sale are actually declining, not because there is not demand but quite the opposite. People are unable to find anything to buy.
People are turning to building new homes. In 2017 we sold 14% more existing homes in Waukesha County than we did back in the peak of the building boom of 2006. New homes, however, sold 33% less thru MLS compared to the same time frame. Why is that?
David Belman just spoke at the newly formed Waukesha County Neighborhoods Initiative and provided an update on where new housing is headed. Belman Homes is working in conjunction with Waukesha County to help find solutions to creating more affordable new housing in the future. On 6/15/18 David Belman was interviewed on AM 620 WTMJ talking about the latest developments in the housing market. Here are some of the latest things happening with new homes.
Milwaukee area Realtors asks us all the time, why are you not building more new homes under $400,000?
The answer is simple, because we can’t.
New construction is more expensive. Here are four factors affecting the cost of new homes. We call them the 4 L’s of new construction:
Labor | Lumber | Lots | Legislation
- Labor- We are facing the greatest labor shortage in Wisconsin’s history. Wisconsin is in the top 6 Nationally for the Oldest Construction workers with a median age of 44. Most companies are hiring laborers with no starting experience at $16 per hour. Nationally we have doubled the amount of permits for homes, yet we have only added 4% to our labor force. It is going to take longer to build homes and the cost of labor is only going to increase.
- Lumber- One of the biggest costs of new homes is framing lumber. Last year was a difficult year for pricing. Framing Lumber composite is 17% higher today compared to 4 months ago and up almost 35% from a year ago due to the 20% tariff on Canadian Lumber and the supply issues from the wildfires and hurricane last year.
- Legislation- Did you know that the cost of regulation added to a single family home is $84,671 due to local, state, and federal regulations per a 2015 NAHB study? It takes nearly 90 days from the day you commit to build a home until you can break ground. Plan on starting early and be patient with the permitting process.
- Lots– Almost 2/3 of the cost of legislation affect the price of lots. In addition to lots taking longer to get developed and the costs added due to regulations, we are now permitting more homes than the lots we are creating. That means lots are going to be in short supply in the near future. Expect to pay more for your land.
What does this all mean? Well if you are considering building, when you are ready, we urge you to act quickly. Pricing is only going to go up and you can expect delays due to shortages of labor. New housing is a great investment and if you own your own home you should be able to sell it fairly quickly and for a good price. At Belman Homes we are glad to help you with selling your existing home and we have a great group of experienced trades to build your dream home.