Building a home vs buying a home is always a debate that brings a lot of opinions. On the one hand, buying a home is more convenient as the house is already constructed for you. You can clearly see everything that you’re getting, and the entire process of buying and moving in can be completed in a matter of weeks.
On the other hand, building property has lots of benefits. Mainly, it can be a lot more affordable than buying a home as you are building something that’s perfect for you. This means that you don’t have to purchase a house and spend more money renovating it. Consequently, it’s always been seen as a good idea for people that want the house of their dreams. Lots of people have started building their own homes, but this number is starting to decline in 2022.
Well, if you look at the real estate market trends, you can pinpoint two major reasons behind this:
Right now, there’s a severe lack of construction resources for most parts of the world. This is primarily caused by supply chain issues - which have happened as a result of the pandemic. Countries are still going in and out of lockdowns, with many closing their ports and preventing companies from shipping overseas. You also have local suppliers dealing with a lack of employees because they’re either off sick or left the job during the pandemic. Some weather conditions in parts of the US have also meant that things like timber supplies and steel are at an all-time low as storms have prevented factories from opening.
It all creates this situation where builders don’t have many supplies to work with. After all, when building a house, you tend to order the supplies for each job. This prevents instances when a building company just has a massive warehouse full of supplies that start to rot or rust. So, if you wanted to build your new house right now, you’d run into a brick wall. Well, ironically, you might struggle as there could be a shortage of brick supplies near you!
When did this shortage begin? Well, it started to rear its head in the latter stages of 2021 and has gotten worse and worse during the start of 2022. Nobody really knows when things will turn around and supplies will be back to where they were. Especially as there are even some reports that the Ukraine conflict may cause further building material shortages. As such, this could be an issue that grips the world for the next twelve months at the very least - possibly even longer.
Does this mean that you can’t build a new house at all? No, of course it doesn’t. There are still property developments happening right now, and there are still individuals that want to build a new house on a plot of land. The problem is that the lack of resources will mean that it takes longer for you to construct your home. Instead of something that should take a few months, it could be well into 2023 or later before you see your home standing tall and proud. For many individuals, this is simply too long to wait. Especially if you are planning on knocking down your current home and rebuilding a brand new one. Where will you stay for over a year as it gets built? You might have to rent a flat, which means spending lots of extra money on it. As a result, the entire homebuilding process ends up being more costly - which brings us perfectly onto the second reason…
As we mentioned in the introduction to this piece, a key benefit of building a house is that you can often do so for much cheaper than if you bought one. This is because you’re in control of all the materials used, and you don’t have to spend extra money on things like property surveys, inspections, renovations, or estate agent fees. However, the cost of building a home is now rising, putting more people off the idea of home construction.
Obviously, you have the common costs to contend with. You’d need to hire an architect to help design your home, a building company to construct it, and so on. Then, there are extra costs, such as paying companies like Sheridan Skip Hire to help you clean up all the building waste on your site, buying furniture, etc. Already, these costs start to mount up, but they can still come to well below the costs of buying a house. So, what has changed to make the cost of building a house more expensive than ever before?
Well, view the first point we went over!
The lack of building supplies has a knock-on effect on the cost of building properties. If these supplies are really hard to get ahold of, suppliers are going to increase their prices. There are still lots of property developments happening right now, so building companies are desperate to get their hands on these supplies. Consequently, we enter a position where the supply is low, but the demand is high.
Think about it like this, imagine a timber supplier can only manage to supply half of what it usually does. If this supplier sells its entire supply for the same cost as normal, it’s going to make half as much as it usually does. This is clearly not good for business and could mean the supplier struggles to stay afloat. Therefore, they are inclined to up the prices to make up for the lack of resources available. What’s more, the supplier knows that companies are going to buy what they’re offering, no matter what. So, they can double the asking price, ensuring they make up for the extra half that they can’t produce right now.
Other suppliers see this and increase their costs to match it. Basically, we end up in a situation where supplies are at an all-time low, but the cost of building materials is at an all-time high. Big property developers are able to deal with the rising costs. It won’t affect them as harshly as it might affect an individual homeowner that wants to build a new house. For a regular person, the increase in costs can mean that building a home suddenly becomes a lot more expensive than buying one.
The best course of action is to weigh up both approaches. If you aren’t desperate to have a new home in the next few months, building could still be a good option for you. Yes, it will likely take much longer than anticipated, and cost a lot more right now. However, if you wait for a few months, the situation might change. Therefore, it could be more affordable for you to wait and then build your house, rather than buying one right away.
On the contrary, if you can find some nice homes on the market that don’t require a lot of work and are well within your budget, there’s no reason to ignore them. Having a brand new house that’s built for you can be extremely beneficial, but it’s not a viable option right now. The supplies shortage means you will have to wait, which might not be ideal for you in your current situation.
Ultimately, the decision comes down to the individual. It all depends on your budget, how desperate you are to get a new home, and why you want a home. You should look at the properties for sale right now, then inquire with some builders/developers about constructing a new home. Get a sense of how much it might cost to build a property, then weigh this up against the existing properties on the market. You may discover that it’s way cheaper to invest in current home and renovate it.
In conclusion, the two reasons fewer people are building new homes in 2022 is that there’s a supplies shortage, which is causing supplies to be more expensive. These two elements combine to make some pretty harsh conditions for most people to deal with. Current property developments have already been delayed, meaning yours might not be up and ready within the year. The lack of key building materials also means you have no idea how much things will cost, and if the shortage keeps getting worse, the price of building a home will increase. The bottom line is that we are currently in the worst possible place to build properties.
However, nobody really knows how long this situation will last. It could go on until 2023 and beyond, or things may start improving within a couple of months. This is why it’s important to not rush into any decisions right now. Weigh up your options, watch the news and look for updates to the supply shortage, then consider whether or not it makes sense for you to build a house or buy one that’s currently on the market.
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