2021 Brings Opportunity and Obstacles for Birmingham's Custom Home Builders

Roxanne Hale

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Many industries have been disrupted over the past year due to the pandemic, and the home building industry is no different.

It seemed as if everyone who was stuck at home, restless and dissatisfied with the state of their current property, sought out builders to either construct their dream home or turn their current house into the perfect retreat. Spurred by low interest rates and access to home equity lines of credit, buyers and would-be renovators turned to builders to solve their housing dilemmas.

Demand for builder services further accelerated when it became clear the existing home market would not keep up with buyer demand. The resale market has been hot - but a lack of inventory has caused many shoppers to consider building a new home or staying put and renovating.

Simply put, homebuilders are busier than they have been since 2006! All this demand, sluggish supply chains, and a tight labor market have created challenges for builders nationwide.

But what does that mean for Birmingham homeowners?

We caught up with local Birmingham-based home builder and renovator Jason Hale, owner of Willow Homes, to determine exactly what type of problems builders are experiencing. And most important – how these issues affect people looking to build or renovate in 2021?

Q: What are the biggest challenges facing builders today?

JASON HALE: Hands down, controlling project costs, labor shortages, and building material delays are the most pressing issues facing builders today.

It's well-publicized that the cost of materials like lumber has increased drastically. The industry is also spread thin when it comes to both labor and materials. In short, we need more people at all stages of the process, from design all the way through to the construction of homes. In addition, new delays are popping up daily on all sorts of products that go into homes, such as tile, door hardware, and appliances (to name a few). Thankfully, the material shortages appear to be a short-term problem driven by the pandemic. The labor challenge has been an ongoing problem for years and appears to be worsening.

TAKE-A-WAY: Anyone looking to build or renovate should factor in a longer timeline. Some building material preferences may not be available either.

Q: What are builders doing about these challenges?

JASON HALE: To address the material shortages, we are ordering items earlier to allow the delays to play out. That can be a challenge because it requires earlier commitment on those product choices from our clients. In short, decisions must be made earlier and cannot be easily changed. Also, if a primary choice ends up out-of-stock, your alternatives are more limited as well.

Solving the problem of labor shortages is more complicated. Long-term, the industry must focus on attracting workers and providing trade education. Today, we find that we must offer strong compensation packages for employees and do our best to create an inviting work experience for our employees, vendors, and trades. When you find talented workers, you don’t want to lose them!

TAKE-A-WAY: Customers who can stay flexible will likely enjoy the process more.

Q: What are the biggest contributors to cost increases in homebuilding today?

JASON HALE: Lumber is number one on the list! The cost of lumber has almost tripled in the last year. However, across the board, we have seen steady cost increases for almost all labor and materials over the past 10 years, and that pace has increased dramatically over the past year.

TAKE-A-WAY: Anyone waiting for building costs to decline before moving forward with a project will likely be disappointed. Waiting could also cost them the chance of locking in a renovation or mortgage loan at historically low-interest rates.

Q: How has the pandemic affected building times?

JASON HALE: We are factoring in at least 6-8 additional weeks for each project on average. For example, a 6-month project has become about an 8-month project. Each stage takes just a little longer than it used to, from permitting all the way through delivery of the finishes such plumbing, lighting, and especially, appliances.

TAKE-A-WAY: Get started on your build or renovation earlier than you planned!

Q: What advantages exist for homeowners renovating or building?

JASON HALE: For someone who loves the location of their current home and is eager to skip the frenzy of buying in the existing home market - renovation is an excellent choice. Over the past ten years, owners have steadily increased their home’s equity and may now have the cash in their home to renovate.

As the country ages, its housing inventory continues to age, so there are many opportunities to renovate. If you are shopping for a home today, it's extremely competitive. Fixer-uppers and handy-man specials often get passed over, which creates an opportunity for anyone who could enjoy the process of renovating. Scattered lots also get overlooked but could be great spots to build on if a would-be homeowner has the time and patience to construct a new home.

The building industry is experiencing rapid changes in standards, techniques, and technology. These improvements show up first in new homes. Today's homeowners who build a new home are getting better quality in addition to modern features and finishes. For that reason, it's a good time to build.

TAKE-A-WAY: Building a new home or renovating an older home are great ways to get exactly what you want in the location you prefer. You may find shopping for a fixer-upper, or a lot you can build on helps you gain an advantage if you have an appetite for it!

Final Thoughts

Despite the current challenges in building and renovating, they remain great ways to end up with the perfect home. In 2021, you’ll need a little more patience with the process, but the results will be worth it! Happy Building!

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Roxanne Hale, owner, and broker of Arthouse has spent over 20 years in the real estate business. Here you'll find a collection of stories about buying and selling real estate & home building advice, housing history, and architecture & design tips. Oh, and some fun personal stories every now and then!

Homewood, AL
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