CEDAR RAPIDS, Iowa - (Iowa's News Now) — The pandemic just keeps laying it on, brick by brick.
Supply chain issues, labor shortages, and rising costs are piling on the pain, including in the housing market.
“I was talking to a builder a few weeks ago and they’d typically have 100 houses in spring ready for sale," says Amy Wienands. "They only had three available. Like that’s a big deal.”
Wienands, a realtor in the Cedar Valley, says construction costs are up more than 24% from a year ago. That's not even close to the increase the industry has seen from pre-pandemic levels.
“New construction pricing is up almost 40% over the last two years," she says. "That’s huge.”
After the housing bubble burst in 2008, Wienands says, new builds didn't bounce back enough. That's now catching up with us.
“It’s that middle-range market where we always keep getting hurt. It’s that middle-range buyer, two to four-hundred grand, where I think we’re starting to see these numbers aren’t working anymore," she says.
Jim Sattler of Jim Sattler Custom Homes says prices haven't gone up too much for him.
“We’re a little bit short of inventory on building new homes, just because coming out of the pandemic builders weren’t putting up as many housing and the bank financing was a little slower doing a lot of spec homes," he says.
He says locally we're faring better than in larger cities where home prices have skyrocketed. He's not having much trouble with delays or material shortages, but says a big factor is price unpredictability.
“I’m going to start a building process and two months in I still might not have any solid idea on the pricing," Wienands says. "That’s hard to navigate.”
Both advise planning ahead whether you want to buy, sell, or build. Anticipate those extra costs into your budget and work with a contractor on what to expect.
Wienands has found that in the higher end market, with home prices above $400,000, demand for new builds hasn't slowed despite that uncertainty. With interest rates still low, some may choose to lock in a mortgage and chance the extra construction costs.
“Better to have a few little cost increases than to have a much higher interest rate," Sattler says.
It's predicted it could take upwards of eight years for these issues to resolve nationally, according to Wienands. Though she's optimistic Iowans will only have to deal for about three years.
“What I’ve seen over the last 30 years is what takes a long time to flesh out nationally is not necessarily going to happen in our market.”