Housing shortage of 2021: Home buyers opting to build instead of buying existing homes
“It was so frustrating. We couldn’t find a home, so we decided to build.”
HUNTSVILLE, Ala. (WAFF) - Choosing to build instead of buying? We are continuing to look closer into the housing shortage in north Alabama.
According to data released from the Huntsville Association of Realtors, the average number of homes listed for sale fell to a twenty-year low of 464 in the second quarter.
This is now putting a lot of pressure on home builders. Homebuyers have no other choice but to build a home instead of buying an existing home.
We talked to several families who faced this problem. Daniel Niemeyer’s family is one of them. They moved from Hawaii to north Alabama. He recently retired from the Navy and got a job with the FBI. He says they looked at dozens of homes but had to move fast.
“We started with the whole buying thing. We found some great homes and offered $20,00 to $30,000 over the asking price. Then we would hear back a day later that somebody outbid us. So, we just decided to go ahead and build a new one, and boom we have a new home,” said Niemeyer.
Same story for Sydney Parker and her husband. They moved to Athens, Alabama from Mississippi for her husband’s job. They were also looking to buy an existing home, with no luck.
“Everything we were seeing needed a lot of work. It was so very frustrating. The homes we put offers in on, we lost.”
So, the Parker family decided to hire a builder. They signed a contract in early May and closed in August. “It was pretty fast. The only reason it was fast was that the home builder we went with is only selling their homes in stage five. We also did not get to customize a lot of the home. Our two options were the color of the mortar or if we wanted a cabinet above the fridge. Everything else was stock home.”
Parker says they made several offers on existing homes but says they were outbid by investors. “We found out investors are coming in and making cash offers. So we learned that if you did not have a cash offer or had a contingency, the buyers were not going to consider the offer.”
This is something that’s gaining momentum, outside investors, driving up home prices and making cash offers.
Christy Weeks the VP of Operations for Hyde Homes has seen this trend too. “We are seeing a lot of investors, from out of state, looking for a place to park their money. We’ve had people from California, New York, and up north deciding to build homes here. They will then turn around and rent them out.
Not only are home builders dealing with rising construction costs, contractors are also hard to find and not to mention the difficult task of finding land to develop.
“I don’t know where we are going to put all these people. There are so many people moving to Madison County. I have never seen anything like this in construction and demand for housing. It’s very, very challenging. Also, the land is getting more and more expensive. They don’t make land anymore,” said Weeks.
Lumber prices are trending down she says, but not as fast as they would like.
“So if a buyer goes under contract January, and we start on the house in August, by that time lumber prices have tripled. We do honor those prices, but it’s then the cost is just passed down to future home buyers.
With Hurricane Ida making landfall, this isn’t going to help. Weeks says it will slow down the supply chain for people ready to move to the Tennessee Valley.
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