We are all well aware of the rise in home prices here in the Tulsa real estate market. Even during the pandemic, construction continued to thrive. But now, we see the cost of construction materials skyrocketing as well. What pushes material costs up and how does it affect the Tulsa housing market?
Construction Materials and Their Affect on Real Estate
Why the Spike in Material Costs?
Several factors impacted the price of construction materials over the last year. First, of course, COVID-19 slowed down the production of materials. Also, the global pandemic affected the transportation of these products to the end-user (the builder). Then, add in the reduction in workforce (carpenters, plumbers, etc.) due to health safety issues, and you see where the supply line falls short. According to Engineering News-Record, 52% of contractors reported significant delays due to a shortage of materials. And Oklahoma’s News 4 team recently reported that lumber prices rose by as much as 182% over the last 12 months.
How Has This Affected Tulsa Real Estate?
Higher cost of materials, decreased production, and delays in transportation for builders trickles down to the Tulsa home buyer in a myriad of ways. First, it means a higher cost to build a home. But it also means that it takes two to three times as long to complete a build than it did before. So, if you want to buy a brand new home in Tulsa, you are looking at a much longer wait time. In turn, this pushed some buyers to turn to the existing home market. That affected available inventory, which also helped spur sale prices upward. And with a scarcity and rising costs of construction materials, builders say they see theft from construction sites on a higher level than before. When that happens, they have to order new materials which brings even further delays. It is a vicious cycle.
As businesses around the country begin to open up, we see more and more people getting back to work. Hopefully, as this continues, production of materials and transportation should start getting back on track. Unfortunately, it may be several months (like until the end of 2022) before we see any sign of that happening. For now, we must just be patient. If you want to buy a Tulsa home, this is the market you are going to deal with right now. Low interest rates make it a great time to purchase a property. Contact me when you are ready to start looking for your next home.
Lori Cain, REALTOR®, Serving Midtown and the greater Tulsa, OK area. Call 918-852-5036.
[…] estate markets across the country are going crazy. That includes our local Tulsa market. The increased costs for building materials helped pushed prices up, up, UP! Inventory cannot keep up with buyer demand. Even so, some people […]