Have you heard that building a brand-new home is too expensive? Think again! It is not as expensive as you may think if your builder stays current with the new industry norms. New home buyers often inquire about supply shortages and exorbitant building costs. This article addresses how Brown Haven Homes is overcoming these common issues in new construction during current uncertain times and keeping prices LOW. Brown Haven has built more homes during the 2020 calendar year than any year prior and has implemented new policies to meet demand. These policies address building material shortages, lengthened build times, and pricing.
Building Material Shortages
It’s common knowledge – building materials these days are expensive and in short supply. Due to the shutdowns we experienced earlier this year, supplies such as lumber, windows, and appliances lagged behind on production. Surprisingly, building demand skyrocketed due to various factors without the production of materials to support it. This caused a break down in supply and demand and led to vastly volatile pricing. At one point, GE was 50,000 units behind in producing appliances. This was also seen in most all lumber categories as they doubled in price practically overnight. Market prices were shouldered by fixed price builders causing them to arbitrarily raise their sales prices to echo material costs while not having solidified data on actual costs. Material supply shortages were not the only component to raise customer concern.
High Demand for Homes
Another factor creating supply and pricing issues with builders is the lack of inventory on used homes. With new work from home policies, a flood of renters and homeowners have decided to invest in larger homes to suit their needs. This effect is compounded with a net migration away from larger cities and higher tax states to more rural areas such as Asheville, NC. If you can work from home, you might as well like where you live! Existing inventory in Western North Carolina is old. Old homes may lead to issues with renovations, maintenance, and potentially other unforeseen costs. Rather than going through the headache of remodeling, buyers are now more interested in creating a brand new, custom home curated to their tastes. This demand has inundated other builders with new business they are not equipped to handle.
How Some Home Builders are Rising to the Top Despite these Challenges
At Brown Haven Homes, we have implemented new policies to meet the increased demand and pricing issues encountered this year. As a larger building company, we can work directly with material manufacturers to buy large quantities of material at fixed pricing months in advance. We are grateful to receive priority from our suppliers due to the large volume of homes that we build. At a time when many businesses are facing large layoffs, we have continued to hire to keep up with new demand. As a company, we have implemented what we call a “Slot Schedule or Start Schedule.” This system allows for even flow of construction starts and closings per month so that subcontractors never experience bottle necks. We provide customers with a clear path through the preconstruction process with our critical dates. Customers must accomplish tasks by assigned dates to reach their start date goal and keep their current pricing locked. If these dates are missed, customers could be faced with a price increase. This creates a completion incentive so that we can start and finish their home on schedule. The last key is subcontractor control. We treat our subcontractors better than any other company. We pay them every Friday and we set them up with scheduling software for clear lines of communication. This creates subcontractor exclusivity with Brown Haven Homes. With a solidified subcontractor base, we can build more homes and meet customer demand.
The New Normal in Market Conditions
Brown Haven Homes has overcome the current market conditions to keep prices low and get more people into the new homes they desire. We accomplish this task through staying ahead of material cost trends, hiring enough staff, implementing new policies, and making Brown Haven Homes a desirable place to work. We are blessed with a wonderful staff who have gone above and beyond expectations during this pressing year. These trends are not an anomaly. Material cost influx, migration away from larger cities into this area, and unforeseen variables will continue to drive the marketplace. We do firmly believe the housing market will continue to strengthen, prices will steadily increase, and building will be the best option. Building a new home is not unattainable or overly expensive if your builder is making the necessary market adjustments. This is the new normal and Brown Haven Homes is ready.