MID-MICHIGAN (WJRT) – Lumber prices finally are on the way down.
The price of lumber has fallen between 40% and 60% alone during the month of June. But as lumber prices fall, home prices and values are not following.
Especially with newly constructed homes, there are other materials like steel and copper that are necessary. Those prices have not shown any signs of coming down.
“They might be coming down a little bit, but we’re hoping they’ll come down a little bit more so we can get some of these prices under control for our homes,” said Rob Moen with Big Sky Development in Fenton.
Over the last two years, he said lumber prices have jumped 300%, but they’re down about 60% over the past two months. At the same time, the price of steel has risen more than 200% since the start of the pandemic and copper prices are up 21% in 2021 alone.
Anyone looking to buy or build a new home can expect to pay $36,000 more on average than this time last year, according to the National Association of Home Builders.
Products and materials like lumber, steel, copper, custom lights, luxury vinyl tile and cabinetry are all in short supply right now. Economics 101: high demand and low supply equals more money out of pocket.
That high demand extends well beyond those custom cabinets and lighting. Home values have remained high –13.2% higher in May this year compared to last year, according to a report from Zillow.
Looking to May 2022, home values are expected to rise just shy of 15%. Low interest rates combined with low supply of homes has created an unprecedented housing market boom.
Any of the million-plus people who plan to build a new home starting at the drawing board should pack their patience.
“The biggest impact is it’s taking longer to get the homes completed,” Moen said. “Right now, we’re running about four months longer to finish a home than we were two years ago.”
Moen has heard from the National Association of Realtors that the housing market could be this way for the next five to seven years as long as there’s a shortage of homes and interest rates stay relatively low.
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