With high demand and continually rising home prices, more investors and home seekers are contemplating the ultimate real estate question … to buy or build? We’re taking a closer look at all the important factors to consider in 2022’s housing and construction markets.
THE COSTS
Build costs vary greatly depending on your builder and design, but you can expect a range between $100-200 per square foot. According to HomeAdvisor, the average cost to build a house as of February 2022 was $282,299. That’s actually less than the median home sales price, which was $400,600 as of that same month (source: U.S Census Bureau and the U.S. Department of Housing data). But these numbers don’t include the price of the land. If we include $200,000 for a 1 acre property, the costs are looking pretty similar.
One concern when it comes to building is the occurrence of surprising or hidden costs. Often, home builders come across discoveries, permit requirements and other hiccups that can add unexpected costs and make the final project more expensive that original the plans. Because of this, it’s hard to really pencil out exact costs and compare them accurately to buying a home.
CONSIDER YOUR TIMELINE
Another big consideration is your timeline. If you are moving for a job or you have children that need to start school or a lease is up, your move in deadline might be set in stone. In this case, it’s always better to buy an existing home. The following is an average timeline for building a single family home:
- Architect designing the home: 2-4 months
- Authorization of plans and permits : 1-3 month
- building the home: 7 months
Overall, you’re looking at about a year long process and, again, surprises can … and most often will … delay that timeline even more. Building a home is best for individuals or families that have existing access to housing and do not have a hard deadline for completion.
AVAILABLE INVENTORY
Due to the high demand of buyers in Oregon, and more specifically, in our region of the Columbia Gorge, it can be very competitive for desirable houses. It is not uncommon for people to write upwards of 15 offers on homes before getting one accepted. Considering this part of the existing housing market, building your own home can be more appealing.
LABOR TO BUILD
2021 and 2022 have been unusual years for employment. We’ve all seen and heard about how businesses are being affected by the labor shortage and construction companies are no exception. Companies in the Gorge have recently had hard time putting boots on plots and paying high enough wages to attract workers to the area. This labor shortage will probably affect your build timeline and maybe even the costs if your builder has to start paying higher salaries.
MATERIAL COSTS
Another disadvantage to building right now is the cost of raw goods and materials. The Covid-19 pandemic created supply chain issues and shortages that have skyrocketed many construction materials. For example, in January 2021 lumber cost $561 per thousand board feet. By that May it had risen to $1,052. As of April 2022 it was down to $829. These type of inflated materials costs will certainly contribute to your building costs and are important to keep an eye on as you try to budget for a build.
In conclusion, the decision to buy or build is a very personal one. As always, we are here to support the process and happy to help guide you regardless of which path you choose.