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Is the Housing Market Running Out of Fuel?

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Is the Housing Market Running Out of Fuel?


September 28, 2020
Home during construction
By Michael Flippo

Builders cannot keep up with demand due to material and labor shortages, but that is not stopping buyers. As demand begins to drain home builders, many are slowing things down as home prices are increasing and shortages are getting worse. Even if home builders had the manpower to build at a faster pace, they would be held back by availability and the cost of building materials. The Philadelphia Inquirer says home builders may naturally begin focusing on higher end real estate for wealthy buyers, as they’re the only ones able to afford homes at this point.

Lumber spike
The trouble for builders is that vacant land takes about two years to be developed, a process slowed by local government regulations. Meanwhile, lumber prices are expected to add $16,000 to the cost of a typical house, according to the NAHB.

They’ve risen because producers idled saw mills in the United States and Canada in March and still face timber shortages resulting from a beetle infestation and wildfires, said Joshua Zaret, an analyst at Bloomberg Intelligence.

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