- You want to buy a house for under
a hundred thousand dollars?
Huh? Let's talk about that next!
- Dave Edwards, Treasure Valley Dave here.
And today, I want to talk about some of the things
that are going on in the market
that I've recently learned from a different perspective.
And I think, it might help you too
to understand the context of, these crazy prices
and the crazy market that we have going on.
As far as prices go.
This letter comes from Titan Homes
and his president is that Aaron Sullivan.
They've been a staple in our community for like 14 years.
They build really nice homes and he shared some things
from his perspective that I found very interesting.
He said that in January, they decided to stop
making semi-custom homes.
Before, you could pick a plan, tweak it a little bit
and make it to, make it customized for you
within parameters. They don't do that anymore.
And which is something that we're seeing
with many builders throughout the Valley.
And the reason that they don't do that is
because the market conditions have become too volatile
and they couldn't price their homes appropriately.
And as he says, later on, they're losing money
on the ones that they already have under contract.
He also shared that with COVID-19 delays
getting building permits, for instance, in Nampa
it's been taking over two months to get those permits.
And of course during that time, prices are going up.
Prices of lumber are going up,
as we will find out more here in a little bit.
So, that's another piece of why things are taking
longer and are more expensive.
Do you also goes on to say that in addition to the permits,
the escalation of lumber prices
have just increased dramatically.
And then he gives some examples of what that is.
Said that price of new homes is going to go up
significantly to cover the rising costs.
And he says, when I say significantly, I mean it
and he had attached a chart from some of his suppliers
to shows that what different things used to cost that.
Now they're up there, like that on the charts
and easy barometer he says, to gauge,
the lumber market is the current price
for a four by eight foot sheet of 7/16 OSB.
And this is the big sheets that they put on the roof,
on the flooring and on the side.
So they use a quite a bit of that in a house.
And he says that in the last 14 years of home building,
the average price for a sheet of OSB has been
about $7.50 a sheet. They've paid as low
as five bucks and 15 cents.
And there was a time that they paid it
in the mid twenties for a sheet.
Currently OSB is going for $40+ per sheet and climbing.
Their supplier said that if they put in an order right now,
that the OSB would be for $65.95 a sheet.
So he says in essence,
they've gone from seven bucks to 70 bucks a sheet.
I would say, yeah, that is a pretty dramatic
increase in prices. He says that the typical home
takes between 350 and 600 sheets of OSB.
So, that really does increase the price of the house.
It's not just these developers out there gouging people.
There's a lot having to do with the price
of the materials going into it.
He says that there are several factors
on why this has happened and he's going
to give us a brief overview.
He said one, that when a COVID hit, there are a lot
of people that were sent home from work
and still being paid. And what do they do?
They flooded out to Lowe's and Home Depot,
and they bought up a lot of the materials,
putting more demand on the market for these kinds of OSB
and studs and things like that.
Number two, is that lumber mills were shut down
for COVID while excess inventory was being depleted.
So there's no inventory to kind of buffer
what's going on in the market
Also says, number three is that there's a shortage
of the glue/resin that they use in making the OSB.
And some mills have actually stopped making some products
because they just don't have the glue to
put the things together.
And number four, he said that when the lumber plants
had the COVID outbreaks they did start
or try to start back up and then they had to shut down
again because of the COVID.
And number six, he's talking about the
a Treasure Valley's growth, more and more homes
are being built yet lumber suppliers
are being allocated shipments based
off the previous year's numbers.
So, builders can only build what they did last year.
They can't even keep up with the increased demand
that we have this year.
So those are a few of the things, and it's not just lumber.
He mentioned too, Sherwin Williams has said that
paint is going to be a problem in the near future
and primer as our light fixtures and appliances.
And I certainly know I have clients that have moved
up here and typically a home will have the appliances
except for the refrigerator.
And they go to buy a refrigerator
and they're on eight weeks back order.
Sometimes I had one client that had to buy
a college dorm size refrigerator and that's what they use
until they actually could get the real one delivered.
Back to that Sherwin Williams example,
he said that there's a huge shortage
on the paint primer. And one of the reasons for that
is their manufacturing facility in Texas was hit
with that big freak snow storm that froze everything out.
So it's like one thing after another is just kind of
like dog piling on our situation here.
He does say that all things considered, this is the single
most difficult period of construction
that he's ever been in. And I'm hearing that
from my other builders that I work with as well.
So I really appreciate Aaron Sullivan of Titan homes to put
out this letter to let us agents
and his clients know really what's going on in the markets.
And we have more of a feel for the whole context
of why things are what they are right now.
If you know of anybody that might find some value
in this information, please go ahead
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We put out new videos every Thursday
and they are all educational, entertaining
Good stuff about the Treasure Valley.
So as always, this is Treasure Valley Dave.
Looking forward to helping you get home.
You'd go up to 150,000?
Let me get my DeLorean.
I'll meet ya!