Real estate is a topic that many people like to discuss – especially residential real estate. Even if they aren’t in the market for a home themselves or aren’t planning on selling theirs anytime soon, they still like talking about the availability of homes, pricing, and trends. Of course, the old adage that real estate is local applies, meaning that conditions in one area of the country may not be the same in another. Even during the downturn a decade ago, some parts of the country were more severely affected than others. In fact, some markets had experienced very little impact.
Nevertheless, property generally declined in value – something most people had not seen or experienced in recent memory. Now, real estate values are in full upswing mode. It is quite common for properties to be sold within hours of being placed on the market and for them to receive several offers above the asking price. Gone are the days of making an offer to acquire the property at something less than the asking price, Often, the sellers get more than their list price and get to choose which higher price offer to accept.
Investors also are buying properties, and the rental market is quite active as well. Rents have gone up substantially in the past few years.
With the limited supply of homes available for sale, with builders adding new homes to the inventory as rapidly as they can, with investors buying up properties at an accelerated pace, and with people remaining in their current homes longer than ever before, there is a real concern about the availability of homes for people to buy. There also is the impact of the Millennials on the housing market with more of this generation trying to become homebuyers for the first time.
There also appears to be a skilled labor concern. Builders are starting a tremendous number of homes but are having trouble finding enough trade contractors to finish those units in many markets. This limits the number of homes that can be started and completed – or at least the time to deliver a completed home to the consumer. Part of this dates back to the downturn in construction when many construction-related firms and individuals found other employment and have not returned.
Land costs and construction costs have increased dramatically in recent years as well. It’s a lengthy process for builders and developers to identify a suitable piece of property for them to use for their new home community, determine that they can get a reasonable return on their investment. get it through the local approval process, grade the site and then install the underground utilities and roadways, create the finished homesites, and complete the onsite amenities prior to opening the property to the public for sale.
Rising material costs along with the land development costs are adding to the increased price of new homes. Material shortages and delays in getting materials delivered to the site affect the length of time to complete a home. Remodeling encounters some of these same material costs and delivery dynamics but on a smaller scale since the entire home is not being constructed.
As aging in place professionals, construction is important to us in terms of making renovations and improvements to our clients’ homes to enable them to remain living where they are indefinitely. Our construction projects might take the form of enhancing mobility inside the home by widening doorways or hallways, eliminating steps at the entrance to the home, adding to the number and location of lights to improve safety and how well people can see in their homes, improving the layout and flow within the kitchen or bathroom, or several other types of modifications designed to provide a more functional use of their space.
The real estate market, in general, is of little consequence to our clients – except as something to be interested in as a spectator, to follow trends, or to observe new products being installed – because they are planning on staying in their current homes and not searching for or moving into another residence. As more people are doing this, fewer homes are available in the resale market pool – adding to the shortage of available homes.
Still, there is a tremendous relief and peace-of-mind among our clients in knowing that their home-hunting days are past and that they can focus on making their current homes the best, safest, most functional, and most comfortable for them to remain in for the rest of their lives. Rather than looking at other homes in their community, they can focus their energies – to the extent they desire to do so – on their present homes to make them even better for their needs than they are currently.