Builders Reduce New Home Options
As most potential homebuyers know, there is a shortage of homes, especially new homes, and some experts are forecasting that the new home housing market for the next few years could exceed 2 million housing starts. Considering housing starts have meandered in the 1.3 to 1.5 million range for the least 5 years, that would be a considerable rise in the demand equation.
The lag of housing starts since the economic and housing collapse of 2008 has created a lack of good quality homes in America, and this coupled with a housing supply that is getting very old, is putting a lot of pressure on the market. Immediately after World War II, and in the proceeding next 3 decades, housing starts with a much lower population were much higher, and this lack of building has decimated the supply chain capacity.
Simply put, the lack of supply capacity of America’s supply chain, and the angst in foreign trade, along with continued COVID-19 spikes, has created a situation in which there is not enough mill and manufacturing capacity for 2 million housing starts. Continued difficulties in finding labor are exacerbating the housing situation further.
If builders nationwide have any hope of decreasing backlog and reducing lead times, as well as controlling costs, they must go to the scale. The term scale means to mass produce to achieve lower pricing and provide great numbers. For laypeople in housing, it could be best described as cookie-cutter housing, but the demand is so great that scale and conformity is the only answer.
Unfortunately, in the magical world of home improvement television all of the homebuyers’ wants and wishes are fulfilled. However, in the current market, fulfilling wishes and wants when the supplies are not available is almost impossible. With lead times on custom windows and doors out nearly 40 weeks and continued pressure in all areas of specialty products, this is not a tenable situation for builders or the homeowner.
The only way to achieve scale in housing is to reduce the number of custom options in new homes, and potential buyers should be aware of this. It is either wait a year or more for a custom home or buy a cookie-cutter home that can be remodeled later.
Here is what new homebuyers should expect regarding options:
Plan on more standard style exterior doors like convention 6-panel front doors, standard French doors, or sliding glass doors in the rear. There will be fewer architectural offerings in windows and more standard sizing. Additionally, options in roof and ceiling designs will be limited so that truss companies can scale up production on roof trusses. There will be less hardware options such as doors and handles, and homebuyers can expect light fixtures to be plain and simple. All of these things can be upgraded after the home is built by the homeowner who may be more inclined to wait on the upgrades.
In the early 1980s when I began in the supply industry every home was built with the same 3 styles of doors, and window size offerings were limited to less than a dozen. One brand of lock was sold, and light fixtures were the same in just about every home. While that created cookie-cutter homes, the homes were more affordable and could be built quicker because suppliers could stock up on the items that builders needed consistently. The number of special orders in the supply industry must decrease significantly if America is going to meet the housing demand equation affordably.
Here is the question new home buyers must come to terms with - do you want a custom home with all the wishes and wants that will cost significantly more and could take three times longer to build, or do you want a home you can afford in a reasonable time? Right now, market indicators and the attitude of buyers indicate they want a home, any home, because paying sky-high rent while waiting for a custom home to be built is not worth the wishes and wants.
Home buyers should not get upset when talking to builders who can only offer limited options for a new home. Builders are doing the best they can in a difficult market where the supply chain is broken. One thing to note, until the COVID-19 pandemic is resolved, and the foreign markets open back up, expect little relief. Cookie-cutter homes are the future of new homes, and the homeowners will have to add the sprinkles after buying.
Don Magruder is the CEO of Ro-Mac Lumber & Supply, Inc., and he is also the host of the “Around the House” Show which can be seen at AroundtheHouse.TV.