No Inflation? Homebuilding Costs Are Soaring
Real estate values may be falling in New York City, but in most of the rest of the country, housing is getting more expensive as demand is outstripping supply.
There are other factors at play here. First, construction crews are nowhere to be found in many real estate hot red states, like Florida, Texas, and Utah. High unemployment insurance benefits caused a loss of construction jobs in May. Second, the cost of the materials that go into a house are raising prices all over the country. Bloomberg reports: "From lumber to paint to concrete, the cost of almost every single item that goes into building a house in the U.S. is soaring. In some cases, the price increases have topped 100% since the pandemic began."
The cost of building materials is by far the biggest factor. Lumber has quadrupled in price from 2019. Prices for appliances are up between 5% and 12% this quarter alone.
If you believe there is no inflation, talk with a prospective homebuyer.