Residential Housing Update - Spring 2023
Since June of last year, the market for new custom builds has been very quiet. However, this Spring, we experienced a noticeable uptick in the number of inquiries. While interest rates have still been on the rise in this period, we speculate that the increased activity may be the result of pent-up demand from the last year or so, since the overall housing market appears to have otherwise stabilized. We stay in contact with many brokers in the region and have head the same sentiment – very little activity in Q2-Q4 2022, but a lot of inquiries early in 2023.
In addition to increased demand for new build homes, construction costs are down across the board, with most major commodities returning to historically normalized pricing.
YoY Commodity Pricing
Lumber -65% YoY
The cost of lumber is down after significant increases over the last two years.
Concrete +12% YoY
The cost of concrete is yup 12% YoY, but it is expected to decrease to -3.5%.
Steel -1.5% YoY
The cost of steel is stabilizing, with a lower cost than the same time last year.
Glazing +4.5% YoY
The cost of glass slightly increased year over year.
Local labor costs in Chelan decreased this Spring with a high supply of available workers relative to demand. Our team receives calls almost daily from tradespeople looking for work. In a select marketplace like Chelan, these are typically smaller local teams, so the local labor market experiences higher pricing elasticity than less volatile and union-influenced areas such as Seattle. In other words, Chelan-based trade partners are often more willing to lower their prices to fill their backlogs.
Overall, construction costs are meaningfully down YoY for new construction homes in Chelan. For anyone looking to build a new home, the current environment poses a unique opportunity to build at a lower cost basis relative to the recent pricing environment of the last few years. We estimate that the current cost for the same home is approximately 5-10% less that what it was one year ago.
As always, we are committed to providing our clients with the highest level of service and craftsmanship. Our team is constantly adapting to the changing market and remains at the forefront of the latest building techniques and design trends.
We are excited to continue working with you in Chelan. If you would like to learn more about what’s happening in the market, have any questions, or would like to discuss a potential project, please don't hesitate to reach out to us.