FARGO – Those looking to build their dream home in the Fargo-Moorhead area have seen costs rise dramatically since the start of the COVID-19 pandemic.
Kim Hochhalter, vice president of Building Concepts and president of the Home Builders Association of Fargo-Moorhead, said it’s not uncommon for home builders to experience a five-figure increase in the cost of a home. âWe’re seeing an increase in an average house between $ 20,000 and $ 30,000 for the person who builds the house,â Hochhalter said.
Driving the dramatic peak is a nightmarish combination of events, the main one being the pandemic.
Beyond COVID-19, however, various other market factors have come into play. On the one hand, despite the pandemic, the number of people interested in building a house “has taken (the suppliers) by surprise. “Hochhalter said, causing supplies to squeeze.
Politics and weather have also played a role in the rocky homebuilding market,
Tariffs on lumber imported into Canada have pushed up costs for U.S. home builders, Hochhalter said. Meanwhile, the wildfires in California and Oregon as well as the recent freezing temperatures in Texas have had a double impact: increasing the number of homes to be built and reducing the supply of domestic wood.
âWith the fires in California and Oregon and the recent devastating events in Texas, they anticipate a need for more materials,â Hochhalter noted. Wood lost in the West Coast fires could have built a million homes, she said.
Lumber has seen the biggest increase in costs since the onset of COVID-19. Lumber prices have risen 180% since last spring, according to the National Association of Home Builders. Wood futures (NYSE: LBS) opened in 2020 just north of $ 400 but closed at $ 952.60 on Friday, March 26.
Given the volatility of the market, lumber yards can only guarantee prices for three days instead of 30 days as is usually the case, Hochhalter noted.
Steel costs have also fluctuated considerably. “The other day we were looking to price a house and they couldn’t give us a price for steel until the next two days because they knew they were going to get a price increase,” he said. declared Hochhalter. âWe see things like this as we price units for our customers. “
Overall, Hochhalter said the complex convergence of market conditions means there are “too many factors” to determine when costs will return to normal. As a result, home builders in the region are working with their customers to ease the impact of volatile commodity prices, either by changing plans or delaying construction to see if market conditions improve.
This year, Hochhalter also predicts that house construction may take longer than usual. “Between the number of houses under construction and the ability of our subcontractors to handle the increase in the number of houses … we plan to add an additional four weeks to our new construction, which we would not normally do,” a- she commented.
The convergence of market factors nationwide has made the residential construction market volatile in the FM region, but Hochhalter believes the situation will improve as lumber yards catch up with demand and lumber prices. Canadian will fall. âIt all affects each other, but I believe there is a silver lining in the road,â she said.
With interest rates “remaining low,” Hochhalter added that residents are still choosing to build and the housing market in the metropolitan area remains robust, even though demand currently exceeds supply.
âIt’s still a good time to build in our region, that’s for sure. she said.