Buying a new home can be an overwhelming experience and with the current fast-past real estate market, buyers are wondering if now is a good time to purchase.
What factors are currently affecting the real estate market?
Probably the most talked-about cost increase has been related to lumber and wood products. Lumber mills significantly reduced or shut down production during the pandemic to observe safety regulations, leaving overall supply in a limited capacity. In addition, the softwood industry has been affected by forest fires and pine beetle infestations. These products affect new home construction through framing, sheathing, trusses, decking, and hardwood flooring, among others.
Materials such as steel, copper, aluminum, and resins are also seeing spikes in pricing due to previously restricted production, the overall cost for electrical installations has increased. Copper has been in high demand worldwide due to the production of electronics and energy storage solutions, adding further pressure to the demand for this commodity. Aluminum prices have increased due to China’s limited production to meet carbon emissions targets, which restricts manufacturers by 100,000 tonnes of aluminum annually. Vinyl siding is made partly using resin materials, yielding limited manufacturing of new siding products.
Beyond the supply and demand issues for building materials, transport has also been a contributing factor. The trucking industry was forced to furlough employees, observed rising fuel costs, and collective bargaining impacted the ability to retain normal operations. The cargo ship that became shored in the Suez Canal was carrying a supply of evergreen, not only causing a delay in the delivery of an already short material, but a major backup of all other cargo containers in its wake. Congestion in terminal rail operations has also contributed to a delay in container deliveries. Overall, the amalgamation of shifting market demand and pandemic recovery has created unique challenges throughout the home building industry. In response to the rising costs of building materials, shipping, and labour shortages, home builders have been forced to increase housing prices. As these operations costs have not yet begun to stabilize, home prices may continue to increase for some time.
Is now a good time to buy?
With interest rates remaining low, it’s another compelling reason for buyers to get into the real estate market now. Even though the overall price of homes has recently increased, the amount you save in interest over the long run will cover the difference in price.
Buying a home is a long-term investment and the sooner you own the sooner you can start building value in your home. The real estate market has proved to be one of the top investments with values consistently growing. As a homeowner, you can benefit from this unique market situation. Buying a home today, before the possibility of price increases, will ensure your investment returns healthy equity.
While the prices of building materials may stabilize over time, the prices we see today will not return to pre-pandemic level any time soon. Feel confident about buying now and invest in your future by taking advantage of growing home values!