Real Estate Update: Supply Challenges and Homebuilding

1

00:00:06,530 –> 00:00:07,363

Hey everyone,

2

00:00:07,363 –> 00:00:08,196

Dan Koreman here.

3

00:00:08,196 –> 00:00:09,380

Welcome to the Real Estate Update,

4

00:00:09,380 –> 00:00:10,213

brought to you by

5

00:00:10,213 –> 00:00:11,140

Alpenglow Properties,

6

00:00:11,140 –> 00:00:13,590

shining light on your

greatest investments.

7

00:00:13,590 –> 00:00:14,970

Thank you to the Local NEWS Network

8

00:00:14,970 –> 00:00:16,440

for keeping the content pumping

9

00:00:16,440 –> 00:00:17,660

over the last year.

10

00:00:17,660 –> 00:00:18,790

I’m so happy to be able

11

00:00:18,790 –> 00:00:21,550

to continue providing

valuable info to you.

12

00:00:21,550 –> 00:00:22,383

And it wouldn’t be possible

13

00:00:22,383 –> 00:00:24,181

without Local NEWS Network.

14

00:00:24,181 –> 00:00:25,990

It’s March 1st, 2021

15

00:00:25,990 –> 00:00:27,320

and spring is in the air.

16

00:00:27,320 –> 00:00:29,230

My wife’s about to have our second child,

17

00:00:29,230 –> 00:00:31,880

and housing inventory

is at an all time low.

18

00:00:31,880 –> 00:00:33,470

Let’s dig into it!

19

00:00:33,470 –> 00:00:34,990

Its safe to assume you all know

20

00:00:34,990 –> 00:00:36,510

what’s going on out there.

21

00:00:36,510 –> 00:00:38,520

Pent up demand in awesome places to live,

22

00:00:38,520 –> 00:00:39,353

like Durango,

23

00:00:39,353 –> 00:00:41,370

has persisted through the pandemic.

24

00:00:41,370 –> 00:00:42,310

Many folks have turned

25

00:00:42,310 –> 00:00:43,490

to building their own home,

26

00:00:43,490 –> 00:00:44,410

and that is what we’re going to

27

00:00:44,410 –> 00:00:45,631

be talking about today:

28

00:00:45,631 –> 00:00:47,540

home building.

29

00:00:47,540 –> 00:00:49,090

Sounds fairly straightforward, right?

30

00:00:49,090 –> 00:00:50,180

You buy a piece of land,

31

00:00:50,180 –> 00:00:51,330

you hire a general contractor,

32

00:00:51,330 –> 00:00:53,240

design a fantastically modern

33

00:00:53,240 –> 00:00:54,351

energy efficient home on your iPad

34

00:00:54,351 –> 00:00:57,538

and bam, you’ve got a home in 6 months.

35

00:00:57,538 –> 00:00:59,730

Well, not so fast.

36

00:00:59,730 –> 00:01:01,840

Builders have faced many headwinds

37

00:01:01,840 –> 00:01:02,890

over the last year.

38

00:01:02,890 –> 00:01:04,370

Creating increases in budgets

39

00:01:04,370 –> 00:01:06,810

due to lack of labor and materials.

40

00:01:06,810 –> 00:01:07,720

One such shortage

41

00:01:07,720 –> 00:01:09,810

was in the lumber industry.

42

00:01:09,810 –> 00:01:11,660

Industry experts say several events

43

00:01:11,660 –> 00:01:13,130

lead to a lumber shortage last year,

44

00:01:13,130 –> 00:01:15,860

including Covid-19 lockdown

orders and closures,

45

00:01:15,860 –> 00:01:17,327

directly affecting the supply chain,

46

00:01:17,327 –> 00:01:19,040

new safety protocols that

47

00:01:19,040 –> 00:01:20,330

slowed production at mills,

48

00:01:20,330 –> 00:01:21,690

and a spike in home remodeling

49

00:01:21,690 –> 00:01:23,860

while Americans were quarantined at home.

50

00:01:23,860 –> 00:01:24,830

This was all followed by

51

00:01:24,830 –> 00:01:26,378

a massive wildfire season,

52

00:01:26,378 –> 00:01:27,570

not just locally,

53

00:01:27,570 –> 00:01:28,440

but all over the world,

54

00:01:28,440 –> 00:01:30,750

directly affecting the supply as well.

55

00:01:30,750 –> 00:01:32,150

Millions of board feet of timber

56

00:01:32,150 –> 00:01:34,610

were wiped out in the

Oregon wildfires alone,

57

00:01:34,610 –> 00:01:38,030

and the southwest has been

hit hard in our supply.

58

00:01:38,030 –> 00:01:39,920

National Association of

Home Builders reports

59

00:01:39,920 –> 00:01:41,040

that between-mid April

60

00:01:41,040 –> 00:01:42,640

and mid-September last year,

61

00:01:42,640 –> 00:01:45,120

lumber prices soared more than 170%,

62

00:01:45,120 –> 00:01:46,850

adding over 16k to the price

63

00:01:46,850 –> 00:01:49,160

of a typical single family home build.

64

00:01:49,160 –> 00:01:51,470

While prices drifted

lower at the star of fall,

65

00:01:51,470 –> 00:01:53,350

they seem to be on the rise again.

66

00:01:53,350 –> 00:01:54,380

A good example of that is

67

00:01:54,380 –> 00:01:55,810

right here at our local Home Depo,

68

00:01:55,810 –> 00:01:59,510

where you can get a 4×8

sheet of OSB for $37,

69

00:01:59,510 –> 00:02:03,460

where that same sheet of

OSB last year was 8 bucks.

70

00:02:03,460 –> 00:02:04,490

At one point last year,

71

00:02:04,490 –> 00:02:05,550

I know builders that couldn’t even

72

00:02:05,550 –> 00:02:08,220

get a GFCI Receptacle due to shortages.

73

00:02:08,220 –> 00:02:09,570

And while many manufactures

74

00:02:09,570 –> 00:02:11,511

are indeed getting production back online,

75

00:02:11,511 –> 00:02:14,390

it will be some time

before we see supply chains

76

00:02:14,390 –> 00:02:15,831

back to normal.

77

00:02:15,831 –> 00:02:17,760

Even then, we’re not sure

78

00:02:17,760 –> 00:02:19,300

how the pricing will be affected,

79

00:02:19,300 –> 00:02:21,600

especially out here in Southwest Colorado.

80

00:02:21,600 –> 00:02:23,000

So something else to think about,

81

00:02:23,000 –> 00:02:24,480

if you’re going to build a home,

82

00:02:24,480 –> 00:02:26,760

is where are you going to put that home?

83

00:02:26,760 –> 00:02:28,551

Pre-pandemic La Plata County

84

00:02:28,551 –> 00:02:31,210

had a plethora of land available for sale.

85

00:02:31,210 –> 00:02:32,630

Still kind of does.

86

00:02:32,630 –> 00:02:35,910

From March 1st, 2020 to March 1st, 2021,

87

00:02:35,910 –> 00:02:38,240

there were 408 residential

vacant land partials

88

00:02:38,240 –> 00:02:39,200

sold in La Plata.

89

00:02:39,200 –> 00:02:40,060

Sound low?

90

00:02:40,060 –> 00:02:42,000

Well, that’s 2X last year,

91

00:02:42,000 –> 00:02:44,320

and 2X the year before that.

92

00:02:44,320 –> 00:02:45,810

So that shows that there already is,

93

00:02:45,810 –> 00:02:46,680

and will continue to be,

94

00:02:46,680 –> 00:02:48,690

a building boom in our area.

95

00:02:48,690 –> 00:02:50,830

There are 149 active residential lots

96

00:02:50,830 –> 00:02:52,760

available in La Plata County today.

97

00:02:52,760 –> 00:02:53,960

So we’ll keep you updated

98

00:02:53,960 –> 00:02:55,140

on the rate of absorption,

99

00:02:55,140 –> 00:02:57,692

as we move into Q2 next month.

100

00:02:57,692 –> 00:02:59,260

We are watching the building

101

00:02:59,260 –> 00:03:00,890

and real estate industries closely,

102

00:03:00,890 –> 00:03:02,220

with hopes of pressure relief

103

00:03:02,220 –> 00:03:04,770

for both consumers and builders alike.

104

00:03:04,770 –> 00:03:07,080

No one wants their budget blown out by 30%

105

00:03:07,080 –> 00:03:09,570

because they didn’t expect

a shortfall on materials.

106

00:03:09,570 –> 00:03:11,100

So its important to vet your builder

107

00:03:11,100 –> 00:03:12,110

early in the process

108

00:03:12,110 –> 00:03:14,650

to ensure their confident

in their numbers.

109

00:03:14,650 –> 00:03:16,030

If you ever want recommendations

110

00:03:16,030 –> 00:03:17,160

on our preferred vendors,

111

00:03:17,160 –> 00:03:18,530

we’re always happy to suggest

112

00:03:18,530 –> 00:03:20,270

some of our favorites in town.

113

00:03:20,270 –> 00:03:22,710

Until then, we hope you

have a wonderful spring!

114

00:03:22,710 –> 00:03:24,360

It’s time to start getting back outside,

115

00:03:24,360 –> 00:03:25,990

and I, for one, am very happy

116

00:03:25,990 –> 00:03:27,871

to do some exploring in our backyard.

117

00:03:27,871 –> 00:03:30,000

Thank you for watching this months episode

118

00:03:30,000 –> 00:03:31,630

of Durango Real Estate Update.

119

00:03:31,630 –> 00:03:33,450

If you’d like to follow

us on social media,

120

00:03:33,450 –> 00:03:36,090

you can find us on Facebook,

Instagram, and Twitter

121

00:03:36,090 –> 00:03:38,090

on the handle ‘@DurangoBrokers’.

122

00:03:38,090 –> 00:03:40,340

Or, feel free to email me any time at

123

00:03:40,340 –> 00:03:42,970

[email protected]’.

124

00:03:42,970 –> 00:03:44,040

Have a beautiful March,

125

00:03:44,040 –> 00:03:46,050

stay strong, and be kind to each other.

126

00:03:46,050 –> 00:03:46,883

Thank you.

Share This Post On
%d bloggers like this: