It might be the worst time to remodel your house. Experts say customers can expect months of delays.

home buying
  • Home-improvement projects are being set back by months due to shipping delays and shortages.
  • The home-buying and remodeling boom has companies struggling to keep up with demand.
  • Skyrocketing lumber prices are also making projects increasingly expensive.
  • See more stories on Insider’s business page.

The pandemic caused a surge in home-improvement projects at the worst possible time and many companies are still struggling to keep up with backlogs of projects.

Over 44% of home improvement plans in the US have been delayed due to supply shortages and skyrocketing material costs, according to data from market research firm, Cardify.ai, a company that uses transactional data to generate reports on consumer spending.

Steve Cunningham the CEO of Cunningham Contracting and the chair of the National Association of Home Builders’ (NAHB) Remodelers Council said his projects are being delayed by months due to the limited availability of materials, as well as laborers. Data from the NAHB Remodeling Market Index indicates that, on average, home improvement projects are facing 1-2 months of delays.

Home construction
A red-hot real estate market has kickstarted new home construction, but builders face a shortage in lumber.

“A lot of remodelers have more business in front of them than they can service,” NAHB Chief Economist Robert Dietz told Insider.

John Bitely, the president of Sable Homes, a home-building company based out of Rockford, Michigan, told Insider that in 30 years of business he’s never seen such demand.

“We usually build houses to sell them,” Bitely said. “We have virtually none of those available right now because all of our labor and production is fully absorbed with creating pre-sold homes. Every home we’re making is already sold because people are chomping at the bit for these new homes and we can’t build our way out of it.”

Not only are home-improvement projects lagging due to spikes in demand, new homes have also become an incredibly hot market. Last month, mortgage giant Freddie Mac reported that there is a shortage of nearly 4 million homes in the US.

Government agencies are backed up

Bitely said Sable Homes faces delays from the very beginning of a project, as government agencies have been slow to give out the necessary home-building permits, adding at least two weeks to the waiting process.

He attributes the delay to the sheer amount of permits government agencies are rushing to approve as home-building demand continues to increase.

Josh Wiener, the founder of home-improvement firm Silver Lining Inc, told Insider it’s been difficult to get projects approved due to the COVID-19 regulations in New York City.

Once a project starts it can get stuck midway through

Supply shortages have been unpredictable in recent months. Cunningham told Insider he’s had projects where a kitchen remodel has been held up by the availability of the dishwasher model or refrigerator. Contractors currently expect to wait an extra 3-4 weeks for appliances to be delivered due to shipping delays and the global computer chip shortage, Cunningham said.

There have been times when Sable Homes has been forced to pivot from one project to another, as contractors wait on vinyl siding or plumbing pipes. Bitely said the company tries to compensate by ordering products well ahead of schedule, but they never quite know what products will be in short supply.

“The biggest problem is the shortage is random so it’s very difficult to fix or nail down,” Bitely told Insider. “Because it’s impacting nearly every facet of the supply chain, it will be difficult to make it go away.”

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While kitchen appliances have been heavily impacted by the global semiconductor chip shortage, other products like paint and vinyl siding are also in short supply due to the Texas freeze. Though, Dietz says the skyrocketing lumber prices are one of the biggest hurdles home-building and improvement companies are struggling to overcome.

“Lumber is a big component of any home project,” Dietz said. “It’s adding about $36,000 to new single family homes and it’s driving remodeling prices higher.”

Home-improvement projects are sure to be more expensive

It’s difficult to predict how much a project will cost.

Cunningham told Insider that his company has an escalation clause in their contract that the material costs may be subject to change. Bitely said he sees prices fluctuate every few weeks.

“As a company, there’s nothing we can do but pass those prices through to the customer,” Bitely said. “We set up the expectation early on that prices are changing and the project may be subject to delays and for the most part customers are not deterred.”

lowe's remodeling
A Lowe’s employee stocks lumber inside the home improvement store in New York.

Other companies have been forced to eat the rising material costs without an escalation clause in their contracts. Wiener said his company has been forced to pay for 100% of costs that are outside of the initial budget. He said Silver Lining has been lucky in that as a bigger firm they have been able to overcome the cost hurdles, while smaller firms might be forced out of business.

Despite delays and rising costs, demand shows no signs of dampening

“Right now, most clients are still going through with buying because they’re desperate for house. They have no other choice,” Bitely said.

Home-building and improvement delays and price spikes are not expected to abate anytime soon. On Thursday, Kyle Little, chief operating officer of Sherwood Lumber, told CNBC he expects elevated lumber prices to continue into the “foreseeable future.”

“It’s really imperative that policymakers improve these supply chains,” Dietz told Insider. “Lumber affordability is key to housing affordability.”

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A $400,000 house got 122 offers in 2 days, highlighting the desperate frenzy buyers are facing amid skyrocketing real-estate prices and a dearth of homes for sale

Suburban neighborhood aerial view
  • A central California home for sale received 122 offers in a single weekend.
  • The selling price was “in the mid-$400,000 range,” according to Fox affiliate KTXL.
  • It’s a symptom of a soaring real estate market where inventory is low and demand is high.
  • See more stories on Insider’s business page.

A California home received 122 offers in a single weekend amid a skyrocketing US real estate market.

The 1,400-square-foot home – located in Citrus Heights, California, a suburb of Sacramento – was listed at $399,900. It spans 1,400 square feet and has three bedrooms, two bathrooms, and a swimming pool, according to a report from KTXL, the local Fox affiliate.

The house received 122 offers in two days, including one above $500,000, and has since been sold for an undisclosed amount – KTXL reports the selling price was “in the mid-$400,000 range.”

The home’s current owners predicted they would receive eight or 10 offers for their home. They’re planning to move to Idaho, KTXL reports.

Read more: It’s actually a horrible time to buy a house

The unprecedented number of offers is a symptom of a pandemic-related surge in home sales. According to a September report from the National Association of Realtors, existing home sales reached a 14-year high last August. Similarly, housing inventory hit a record low in September, and dipped even lower one month later to 2.5 months of supply.

Those who already own homes are opting not to sell, and new home construction has dipped over the years. But according to Bloomberg, new home construction rose to a new high last August, its highest since 2006.

Given the low inventory, home prices are also on the rise. Prices soared through the end of 2020, jumping the most in seven years by December, according to the S&P Case-Shiller US home-price index. Phoenix, Seattle, and San Diego saw price increases among the 19 cities surveyed.

A rush to buy up homes may lead to regret for new homeowners

The real estate frenzy is driven by a combination of factors. Mortgage rates hit record lows a dozen times in 2020 alone, and the pandemic induced a desire for outdoor space or a more comfortable work-from-home arrangement.

According to research from investment management firm Cowen and Company published late last year, there’s been a noticeable migration among people ages 25 to 34 from urban areas to suburban ones. Among the 2,700 people Cowen surveyed, 48% of millennials reported living in the suburbs compared with 44% in 2019.

Those who reported living in cities fell to 35%, down from 38% last year.

“This suburbanization trend has been slowly occurring since 2017, and we expect it to accelerate with the COVID-19 disruption,” Cowen analyst John Kernan wrote. “These results are also corroborated by a shift in home ownership.”

The rush to snap up homes during the pandemic has already led to regrets for many buyers. The Wall Street Journal’s Candace Taylor reported last month that buyers were making hasty purchases, skipping due diligence, and waiving inspections. One family discovered a wasp infestation after closing on the house, while another learning they’d have to spend $150,000 on siding to alleviate a woodpecker issue.

A LendEDU survey from September found that roughly 55% of Americans who bought houses during the pandemic reported buyer’s remorse – 30% of those people said they should have waiting to buy a home for financial reasons.

Scott Trench, the CEO of the real-estate-investing resource BiggerPockets, recently told Insider’s Taylor Borden that it may not make sense to try to buy a house right now.

“Frantically trying to buy ‘something’ is a great way to make a bad purchase,” he said.

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