According to an analysis by mortgage-finance company Freddie Mac, the U.S. housing market is 3.8 million single-family homes short of what is needed to meet the country’s demand. The shortage is especially affecting the supply of entry-level homes, making it more expensive for first-time home buyers to enter the market.
Additional statistics of the housing market include:
- New home sales in April fell almost 6%, more than analysts expected. Every region saw a decline except the West, which was up 8%.
- The median price of a new home jumped 11.4% in April to $372,400.
- 63% of surveyed buyers said they put in a bid without seeing a property in person.
- Sales are closing on average 1.7% above asking price, despite home prices already rising 24% annually.
- Lenders have called employers to confirm buyers have permission to work from home after the pandemic.
- In California, the new median home value of $813,980 is up 7.2% from March and 34% from a year earlier. This is the first time the median home value has shot past $800,000 in California.
A number of these trends are emerging due to low interest rates, expensive lumber, and supply chain shortages. The housing market continues to see a backlog of new homes that have sold but are awaiting construction.
While manufactured modular homes are not exempt from these issues, the industry is trying to stay on top of supply shortages to continue to meet demand. A division of Chief, BonnaVilla, has encountered several supply issues over the last 12 months, but have also pivoted quickly to have alternative options on hand. BonnaVilla expects that the housing industry will continue to see high demand well into 2021, as demand continues to surpass inventory.
With high demand, a tight supply chain, and low interest rates, there is a lot of competition for houses currently on the market. However, for those who are looking for a new build but don’t want to wait a year, we have the ideal solution – manufactured modular homes. Modular homes are more like hybrid homes, with the pricing of a pre-built home but the flexibility that comes with building a custom home.
Benefits of a manufactured modular home:
- Keeping everything in one place minimizes the costs of transportation and delays.
- Use of efficient, quality equipment not available to most builders to ensure higher quality at a similar or lower cost. This allows us to offer reasonable prices while maintaining a wide range of design options for the home you want.
- With all of our materials and teams within the same vicinity, we can focus on quality without the pressure that causes most homebuilders to rush completion and make mistakes.
- BonnaVilla warehouses protect our homes from the weather.
While BonnaVilla can control the quality of their builds, schedules that are not impacted by the weather and some costs, they face the same supply shortages as the rest of the industry. From exterior to interior paint, flooring, siding, appliances and more, the team is consistently working with our suppliers to find alternative solutions. The pandemic slowdown in manufacturing, the sudden rise in demand, power outages in Texas, surges in material costs, and lack of availability for certain components have all contributed to the supply shortage situation. One of the cornerstones of our relationship with our builders is communication, and as always, we want to make sure we continue to communicate about the market for materials.
Lumber pricing has been a primary driver of rapidly escalating costs since the fall of 2020. During May, the market price for all lumber and OSB saw the most sudden and dramatic increases so far. As the market for lumber has been skyrocketing, the damage to the supply chain from the winter storm in Texas has begun to take effect. Certain chemicals used in the production of plastics have been impacted dramatically. This lack of production is pushing prices upwards for items like vinyl siding, windows, shingles and underlayment, carpet pads, bathtubs, and more. It has also impacted chemicals used to produce ingredients for latex paint, caulking, etc.
The impact of this combined with the increased demand for steel and metals has also impacted the availability of kitchen appliances, furnaces, and water heaters. At the same time, the metals used in wiring, frames, and other materials have seen increases in demand and pricing. Unfortunately, the overcrowding of our nation’s ports is causing an increase in the cost of imported items like sinks, blinds, and even mirrors. Delays in shipments are common with transportation and container shortages. Like most others, all of these headwinds come in contrast to higher-than-expected demand for everything including transportation. This has created availability issues for many of the construction materials that we, and the entire industry use, for residential construction.
As you embark into homeownership, keep these tips in mind:
- Don’t narrow your finishes down to one selection until you have spoken with your builder. Allow the builder to help you identify the style, look and availability of your finishes.
- Get preapproved ASAP. Getting preapproved for a mortgagebefore you go house hunting is a must in any market.
- Limit your house payment to no more than 25% of your monthly take-home pay. This payment includes principal, interest, property taxes, homeowner’s insurance and, if your down payment is lower than 20%, private mortgage insurance (PMI). Plus, don’t forget to consider homeowner’s association (HOA) fees when preparing your budget.
- Super low mortgage rates are motivating buyers to enter the market, which increases demand. But there’s still a very low supply of home listings; therefore, building a custom modular manufactured home is a great option.
The challenges in the housing market did not vanish as we turned the calendar to 2021. However, we look forward to the opportunities to help provide supply to an ever-increasing housing demand. “We have a strong backlog going into the second half of the year. Our team is working hand in hand with our builders to provide customized options for their customers’ dream homes. It is rewarding to transport homes across the Midwest to first time and repeat homeowners,” said Dan Fitzgerald, General Manager of BonnaVilla.