New Construction Homes in Short Supply as Resale Inventory Remains Low

The battle over resale properties is still raging among home buyers. Once-upon-a-time the New Construction industry would have easily picked up the slack but that isn’t the case in our current Real Estate market. Contractors are encountering a widespread shortage of construction and utility workers, in addition to the infamous supply chain issues that are affecting businesses across the board, bringing about an interruption in timelines for completion of newly constructed homes.

Having said that, if you are a few months out from needing or wanting to move, New Construction might just be your best option for finding the home of your dreams. Inadequate inventory in the residential resale market is still responsible for multiple offers and bidding wars, driving home prices up nationwide. For the majority of home buyers right now, the amount of time it takes to purchase a resale property is often the same as the wait for a new-build home.

In addition to the benefit of not dealing with repeated attempts to outbid the next guy, there are plenty of other reasons for considering a New Construction home.

1. The Price is the Price – No haggling, no competition. The price on the New Build contract you sign is the price you pay unless you change details of the home.
2. Customized to Your Taste – Colors, flooring, appliances and design details will all be exactly what you choose including luxury features not found in many resale properties.
3. No Deferred Maintenance – Between the builder’s home warranty and the simple fact that everything is new, you’ll have a ‘grace period’ of sorts, possibly even years, when little or no maintenance or additional expense will be needed.
  
  — Don’t Miss Our New Construction Advantage Discount —
4. Modern Standards – Heat and A/C as well as appliances will meet current standards for energy efficiency and construction materials and methods will conform to prevailing building codes.
5. Modern Floor Plan – Today’s floorpans incorporate more natural light and are far more focused on functionality and convenience.
6. More Relaxed and Enjoyable Home Buying Experience – This one is probably not immediately obvious but it is an absolute benefit. I’ve suggested going the New Construction route to several of my buyer clients who were experiencing today’s unavoidable frustration of buying an existing home for sale. None of these clients have expressed to me, even a smidgen of regret during the purchase process or after moving into their new home.

One caveat before you consider a New Construction home: Always bring your Real Estate Agent along when you visit a new-build site or a model home; this costs you nothing. The sales person at the New Construction site is indeed knowledgeable, BUT they exclusively represent the builder; you have no representation without your own agent. My Buyer Representation is always FREE, and I will inform you of conditions and resources that you would otherwise remain unaware of when visiting New Construction on your own (including developments not available in MLS or online home buying sites, new active adult neighborhoods, and new master planned communities).

Published last year, the article below from RIS Media details employment deficiency in the New Construction industry that continues into 2022.

By RISMedia Staff

The U.S. Bureau of Labor Statistics recently released a jobs report for July, stating nonfarm payroll employment increased by 1.8 million for the month, while unemployment fell to 10.2 percent.

In July, the number of unemployed persons decreased by 1.4 million to 16.3 million, and while the last three months posted declines, this number is still up by 10.6 million since February. Temporary layoffs decreased by 1.3 million in July to 9.2 million—about half of April’s level.

Employment in the leisure and hospitality sector increased by 592,000 in July, while the food services and drinking sector saw an increase of 502,000 in employment. Retail trade saw the addition of 258,000 jobs in July, and jobs in professional and business services increased by 170,000 in July—still 1.6 million below the February level.

According to the report, financial activities added 21,000 jobs in July, primarily in real estate and rental and leasing (15,000-plus). Construction employment stayed relatively flat (20,000-plus) after job gains of 619,000 in May and June combined. Employment in the industry is 444,000 below the February level.

Here’s what the industry is saying:

“Jobs are coming back, with 1.8 million net new additions in July, bringing the total to 9.3 million over the past three months as the economy has steadily reopened. This is far from normal, as another 13 million jobs are needed just to get us back to pre-pandemic employment levels. The unemployment rate fell to 10.2 percent, and it is lower in states that reopened earlier: for example, 7.6 percent in Georgia versus 15.7 percent in New York. But coronavirus infection rates are rising more steeply in more re-opened states, thereby illustrating the tough tradeoffs in the decision between livelihood versus lives, and about which states will be most hurt (temporarily) during the impasse in new Congressional stimulus negotiations.

“With housing shortages across the country, construction jobs need to ramp up. My estimate is that 3.5 million residential construction and general contractor jobs are needed to fully supply the market with new inventory. As of July, there were 2.8 million employed in the sector. The average weekly earnings in construction are at $1,154, much higher than the $348 per week in the leisure and hospitality sector that took the brunt of job losses. States should consider retraining workers to go into industries where the pay is higher and jobs are critically needed.” — Dr. Lawrence Yun, National Association of REALTORS® Chief Economist

“The pace of job growth slowed in July, but the gains over the past three months represent an impressive rebound during the ongoing economic challenges brought forth by the pandemic. Although 9.2 million people remain temporarily unemployed, another 1.3 million workers have been called back to work, and the number of permanent layoffs remained steady at 2.9 million. The unemployment rate declined in July, but at 10.2 percent, this is still higher than the peak during the Great Recession. Broader measures of underemployment—such as the U6—have fallen even faster, but remain high at 16.5 percent of workers either unemployed or underemployed.

“MBA’s Weekly Application Survey continues to show robust demand for home sales, and record-low mortgage rates are fueling an ongoing refinance wave. Today’s report should continue to support both: the return of jobs will keep housing demand strong, and the high level of unemployment ensures that the Federal Reserve will keep rates at zero—meaning mortgage rates will stay low for an extended period of time.” — Mike Fratantoni, SVP & Chief Economist, Mortgage Bankers Association