A once smoking hot home buying market is slowing nationally from its two-year low in January 2020 to its peak in Spring of 2021. Higher prices and lower supply is to blame for the market cooling.
Meanwhile on the construction side, both remodelers’ confidence and builders’ confidence is strong as single family home construction posts double digit increases despite inflationary prices and supplies shortages occurring.
Still, builders and modelers say a crisis is looming as they watch four things happening:
01.
Workforce Shortage
The average construction worker’s wages have increased nearly $2 an hour in the past year to over $28 in the latest figures from the National Association of Home Builders.
Reduced number of people entering the trades is increasing wages, which increases the cost of housing
-
- Electrician $61,152 to $72,842 per year
- Plumber $66,435 to $80,101 per year
02.
Supplies Shortage
- Steel costs are up 200%
- Items arriving overseas: 159% increase
- Garage doors take 24 weeks to come in (specialized doors take 32-34 weeks)
- Lumber prices alone caused an $18,000 to $30,000 increase in a single family home, NAHB says due to tariffs and low production.
03.
Local Home Sales Increase 16%
Realtor Joe Kress with Century 21 Affiliated says “In greater La Crosse, the average price of a home sold in 2021 was $237,000. That’s up 16% from the prior year. Five years ago, the average price was $190,000.
Onalaska’s Associate Planning Director Erin Duffer points to their housing study showing the average price increased 12% in 2021 compared to the prior year. The study looks at housing and rental cost as well as available land to create strategies to addressing affordable housing.
04.
Regulation
Builder Mark Etrheim with Mastercraft Homes stated that everyone wants safer homes. Often, these come with significant additional cost that directly impacts housing affordability. When the State of Wisconsin changed its sprinkler requirements to cover all homes with two or more units, the requirement added $6,000 per unit to housing.
