The most expensive ongoing financial investment that non-renters have is most likely their home. If plywood-related memes on social media are any indication, many homeowners are becoming increasingly aware of the heightened lumber prices compared to this time last year.
It isn’t just lumber. Many building materials are rising in price for various reasons. On the demand side, many people this past year were working from home and saw the need for additions to account for new workspace. Spending more time at home seems to have shown many the need for remodeling. With low mortgage rates, many Alaskans have the discretionary funds to hire suppliers and builders.
Yet there are a couple of uncertainties in building a new home at the moment. While demand for lumber and building material has increased since last fall, supply blockages have hampered attempts to increase production. Examples are bottlenecks in obtaining resin for wood flooring and sheeting product; delays in annual certification of U.S. mills by overseas crews; and shortages in skilled labor needed to commission new or open mothballed mills.
And homeowners feel the results. For instance, the National Board of Realtors has tracked construction cost increases of almost a fifth of the median prices of homes since last April. The effects also are present on existing home values. In some regards, the active housing market this past year may have been riding on the coattails of other delayed economic activities.
For some people, more housing-related funds came from money freed up from canceled travel and vacations. Some people may have budgeted to buy large items, which never materialized due to manufacturing shortages. Others may have saved gas money by not commuting to work this past year. That money may be available for remodeling or for down payments, title and transaction costs on home purchases.
If you are thinking of building this summer, keep in mind that while there may be fewer new buildings projected due to higher material prices, the supply of contractors in your area may be more sparse than usual.
Many builders who normally come to Alaska for the building season have canceled due to uncertainty of getting materials up here and from labor constraints. Remember that there are also other pricing factors that you will want to think through beyond mere supply, labor or lending costs (such as the price of land).
If you are not thinking of building on a city lot with supplied sewer and water, looking at the viability of an affordable septic system and well is important. Also investigate the cost and timing of any permits needed as well as any subsequent inspections.
With land, you’ll want to make sure you know about the setbacks required by the state so that there is a proper buffer between the prospective well head and leach field. Check out the availability of septic installation crews and well drilling staff in your community to see if they can fit you in before the hard frost arrives.
Finally, keep the landscaping and entryway of the home as stair-free as possible for purposes of accessibility as you age. These are things you might want to keep in mind as you look to make the best investment in your greatest asset: your home. For more information on healthy homes, accessible living or other housing concerns, contact Art at 907-474-6366 or at email@example.com.
Art Nash is the Extension energy and radon specialist for the University of Alaska Fairbanks Cooperative Extension Service. Contact him at 907-474-6366 or by email at firstname.lastname@example.org.