Builder headaches from Tahoe to Boston include lumber prices, labor issues, land, and material shortages. Builderonline.com recently reported that the “latest lumber price hikes add more than $18,600 to new homes.” Last May, feeling the effects of the pandemic, lumber prices spiked to $1,500 per thousand board feet. Prices then leveled off for a bit.
By the end of December, according to Random Lengths, “the price of framing lumber topped $1,000 per thousand board feet—a 167% increase since last August.” The reasons for the increases include supply chain gridlock, doubling of tariffs on Canadian lumber imports, and a damaging wildfire season in the Western U.S. and British Columbia.
What’s a builder to do? Catherine Bassick of Boston-based Bassick Real Estate Advisors is a longtime top producer who sold the first-single family home over $100 million in the U.S. and works closely with luxury builders.
Bassick offers an insiders’ look at the issues Greater Boston’s builders face with spiking lumber prices. “These price increases affect all segments of the lumber supply. Between Canadian tariffs, labor shortages at Georgia-Pacific, one of the largest lumber processors, and lenders placing lumber contingencies on construction loans, the impact on builders is huge.” Supply chain issues are pushing builders to use the wood they receive immediately to meet construction deadlines. Bassick’s advice to those shopping for a new home: “If buyers find a house they sitewant, they really should buy it now.”
Moving about 2,900 miles west to Lake Tahoe, luxury builders face various challenges. Clifton Taylor, president of Taylor Builders, is a leading Northern California Builder and at Northstar in Lake Tahoe. “The last few years, the market in Lake Tahoe has been explosive. Land is a finite resource in the Tahoe area, and because of this, there are only a few viable projects over the next couple of decades,” Taylor explains. “This puts a lot of pressure on existing inventory. At Northstar, there is robust demand for custom lots and built inventory.”
Lake Tahoe also has construction industry labor shortages along with shortages of building materials. “What happens is homes are now more expensive to build while taking longer to complete. People don’t want to hear it will take three years to build their home,” Taylor attests.
Jeff Brown, owner and general manager of Tahoe Mountain Realty, has been selling luxury residential real estate in Lake Tahoe for several decades. “Time is the greatest variable for us in this business. There is a certain shelf life to an asset here. If an owner can’t occupy a home for several years, that could be 25% of the asset’s life if you are only looking at owning a home here for, say, maybe 8-10 years,” Brown said.
It’s no surprise buyers of vacation homes in a ski area want to be able to use that home sooner than later. “The shortages of labor and materials are definitely impacting sales of raw land. Under normal circumstances, the time period from acquisition to occupancy, including design, engineering, permitting, and construction, is about 12-18 months. Now that has doubled,” Brown confides.
“We have had a number of transactions of raw land that have not occurred. Instead, those buyers have purchased a finished home that may not have everything they had wanted,” he adds.
Buying a finished home, imperfect or not, isn’t easily done in today’s still hotter than hot market.
Bassick Real Estate Advisors and Tahoe Mountain Realty are exclusive members of Forbes Global Properties, a consumer marketplace and membership network of elite brokerages selling the world’s most luxurious homes.