When you first started thinking about building a new home, you may have had visions of researching, your dream home, then drawing up your dream house plan, or else paying a professional like an architect to help you do it. This is what a person had to do ten or 20 years ago, but now the Internet makes it easier than ever to make your dream home a reality.
For example, say that you want a modern house plan. The Plan Collection makes finding your dream home a breeze. But once you have found a lot, and then purchased your house plan, then it is time to talk building. And this is when many people run into troubles…especially with home building costs. One issue, for example, is the rising cost of lumber.
According to Capital Economics, a London-based financial research consultancy firm, an increase in U.S. housing construction is expected to raise price of lumber by the end of the year 2014. The overall prices are expected to increase almost 30 percent, from $313 per 1,000 board feet to $400, by the end of 2014. This group attributes the expected rise to increased demand in the U.S. housing market.
Now, construction in the U.S. is up. It did not help that construction slowed considerably because of the unusually cold winter this last winter, forcing construction to hit nearly two-year low in March.
When the market was more stable, suppliers of roofing and decking materials would buy at low prices in bulk and then store supplies in order to pass along savings to builders. But what ultimately happened during the downturn over the last decade actually forced suppliers to reduce their larger inventories, resulting in fewer discounts to builders.
Building materials faced price increases this last January 2014 and there will be another increase during 2014. Here are just a few things you may want to know before building your new home.
Lumber prices fell in May for the very first time in two years. Lumber is the most popular framing material in home building market. Due to fewer “old growth trees”, the price of it has steadily increased. This recent price weakness of lumber stems (in part) from China slowing down property investments.
China’s “reduction in commodity was an -intensive activity” has also had a hand in the fall in lumber prices, as well as construction metals.
Steel framing studs are now more popular in the residential market because they do not deteriorate plus they are able to withstand extreme weather conditions. But, they are expensive!
Another issue affecting the cost of building a home is labor. The more jobs there are the more demand, so labor is going to the highest bidder. Back when the market first slumped, building slowed to manage housing inventory causing a surplus in building materials and a labor force anxious for work.
Where you build your home matters, and can cost more. For instance, if you plan to build at a remote site—say at a beach or in the mountains—make sure you learn the availability of water, electricity, gas, etc. and review the possible difficulties the location might cause construction crews.
Many houses have been built based upon pre-drawn house plans, but the vast majority of homeowners made changes, or modificaitons, to the house plan while building the home. Some of these changes may have been very minor while others represented substantial modifications.
The housing boom will also mean you need to review costs with your builder concerning the amount of time they will spend throughout the construction of your new home. Make sure you know if they will use their own crews.
In the end, it is about supply and demand. Some other issues that can affect home building costs include: fire, pestilence, transportation costs and even politics all of affect construction pricing.
What’s more, although interest rates are still low, this will not last either, so the sooner you build your new home, the better.