Are building prices going sky high? I've made a couple of previous posts about my concerns for what will happen with new home construction costs in the Wenatchee real estate market... and across the nation. Here is a link to an article in Inman News that explains a little more about the overall situation. Keep in mind, this was an article written after Hurrican Katrina but before Hurricane Rita (or whatever other Hurricane's still come along this season), so the situation will only get worse. The Inman article estimate on the projected percentage of cost increase in new construction is far lower than what I've been hearing. On yesterday's news, interviewed building suppliers were saying costs have increased as much as 30%! We're not just talking lumber, which is in such high demand, but many of the materials used in new construction (such as roofing) are oil based.
This all could affect the rental market, as well, while people opt to continue to rent while waiting for construction prices to level out. Will this affect people's decision to sell their homes (to build a new home) because of the looming cost of new construction? Will they sell their home (taking their huge equity) and become renters while the prices stabilize? Will the renters decide to give up on their dream to own a home because it is too expensive? Will there be even greater interest in existing home sales, where prices per square foot are far more attractive than new construction? Remember Newton's Third Law... "for every action there is an opposite and equal reaction".
Our elected politicians will have a significant effect on the future of the housing market (and entire economy) across the country. While they want to do the humane thing of promising to help rebuild, it creates a burden on other areas of the country, where the labor and supplies are being drawn from. This causes a trickle out (dollars leaving) on the local economies, literally affecting everyone in every large city and small town across the United States. .. yes Wenatchee, too!
We're such an intertwined economy, there will be many actions and reactions, which will cause another reaction, causing another reaction and on and on and on. Reminds me of the old saying: "Oh what a tangled web we weave".