"The Big Move" is a MarketWatch column that looks at the pros and cons of real estate, from finding a new home to applying for a mortgage.
Do you have a question about buying or selling a home? Do you want to know where your next step should be? Email Jacob Passy at TheBigMove@marketwatch.com.
I live in New Jersey and dream of a new home built around the shore.
I'm looking for a single family home but it seems the construction industry is having trouble finding materials and all new builds have stalled.
Is there a statement about when newly built houses will reappear?
I hope for a beach house
Problems in the global supply chain are actually hindering the construction of new homes – and unfortunately there is no real end in sight.
Perhaps the most pressing problem for home builders right now is the lack of sawn timber. According to experts, there is no particular cause. "We talk to builders and if you ask, you get a lot of different explanations," said Robert Dietz, chief economist for the National Association of Home Builders.
The sawmill industry saw production declines between July and September – likely in part due to COVID-19, which was causing production problems. It has improved since September and is now bigger year-on-year, Dietz estimates.
However, the demand for sawn timber has increased significantly. There is currently a serious shortage of homes for sale. Americans are nervous about listing their homes either because they continue to have concerns about catching COVID-19 or because they may have trouble finding a place to move to.
Either way, that got people into the market for new homes who would otherwise buy a cheaper, existing home. And it seems to some extent that the wood industry was surprised at how much demand for new houses, and therefore wood, has increased a few months after the pandemic started.
The shortage of refrigerators and microwaves is due to the shortage of chips, which are affecting a wide variety of industries, from home appliances to automobiles. Steel is also shorter.
Today, the prices of lumber are many times more expensive than they were a year ago, adding tens of thousands of dollars to the price of a newly constructed home.
The shortage of materials does not only affect sawn timber. It is currently very difficult for building owners and redesigners to get their hands on new devices. The shortage of refrigerators and microwaves is due to the shortage of chips, which are affecting a wide variety of industries, from home appliances to automobiles. Steel is also shorter.
"When you talk to some home builders, they can't necessarily guarantee the timing or final price of certain types of home due to the unpredictability you are currently seeing in the building materials market," Dietz said.
In your particular case, the problem of finding a newly built house might also be a more local problem. After the pandemic, we've seen a shift from big cities to the suburbs. With employees suddenly being able to work remotely – if not full-time, then at least part of the week – this has broadened the range of locations they can consider based on where they live.
Plus, millennials are getting married and having kids, which may make urban living spaces a little cramped.
It's a trend that certainly played out in New York City. And while the Jersey Shore may not be the primary destination for all of these people looking to move, it's likely that the market has been inundated by nearby communities.
Wave of people buying vacation homes
The pandemic has also sparked a wave of people buying vacation homes. Many people do not want to leave big cities permanently but want a place to escape to, and other people these days are less interested in staying in hotels. The surge in interest in second homes has certainly had an impact on your market.
The high demand for homes in your area means whatever newly built homes bring to market is likely to be picked up in a flash. And the rise in construction as new homes are built has likely created competition for local supplies.
My ultimate advice to you is to be patient. Some of the material related challenges facing the construction industry should resolve themselves in due course. And as people get back to the office, the demand for suburban housing could easily cool if workers worry about their commuting again. For these two reasons, next year could be a better time to buy a newly built home.
Alternatively, consider expanding the range of locations you are considering. Look up and down the shore and don't just focus on specific cities. Or, consider buying in another state where you may have less competition for your dream home. Whichever route you choose, I hope you won't be forced to play the waiting game too long and you will find your right home soon.
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