For the last 18 months, home prices have been increasing at an unrelenting rate. In many New Jersey counties, the average home price increased by 20% or more.
New Jersey March Median Price Changes
Monmouth County + 22.3%
Ocean County + 24.$%
Middlesex County + 17.7%
Union County + 21.5%
Morris County + 22.5%
Part of this increase was due to the surge in buyer demand but also a combination of low interest rates and inventory shortages. Inventory shortages has been nothing new for the state for the last 3 years. In many towns inventories have fallen from an 18-month supply to under 2 months supply.
From October 2018 to March 2021, the inventory of available homes for sale in the state has fallen from 40,000 to 14,780.
Now there is another factor driving up home prices, and that is the cost of building supplies, specifically in this case, lumber costs.
For the past year and a half now lumber prices have been increasing to the point where they have tripled in the last 15 months. According to a number of articles this has added an extra $30,000 in the cost of new home construction. In the south of the country, plywood and lumber are literally flying off hardware and store shelves. According to Friday’s numbers, lumber futures for May delivery came in at $1,500 per board feet, which is another new all-time high and roughly four times the price that it was 12 months ago.
Mill owners are finding that they are backed up with orders into June. New home construction continues to find ongoing a ferocious demand for building materials for the new homes, creating never before seen shortages, greater delays in home construction and even in renovation. Builders are having to bid up for material supplies, creating havoc in costs and in the time it takes to build a new home.
The escalation in lumber costs are also having an indirect impact upon the home buyers who walk into a home and realize that the renovations they thought they wanted will now cost significantly more than anticipated. Renovators are also having a problem getting building supplies, especially it comes to lumber. So, on top of having two bid up for a home, the new homeowner will probably have to pay up for renovations to be done to their new purchase.
If you have any questions about this information or title insurance, please contact Ralph Aponte: 732.914.1400.
Counsellors Title Agency, www.counsellorstitle.net, founded in 1996, is one of New Jersey’s most respected title agencies, serving all 21 New Jersey counties with title insurance, clearing title, escrow, tidelands searches, and closing and settlement services for commercial or industrial properties, waterfront properties and marinas, condominiums, townhouses or residential single family homes. Counsellors Title also features its own Attorney Settlement Assistance Program™ [ASAP], which is an individual resource customized to fit the needs specifically of real estate attorneys, including, Documentation, Preparation, Disbursement of Funds, Attendance at Closing, HUD Preparation or Post-Closing Matters.
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