Real Estate Update: Supply Challenges and Homebuilding

3/8/2021

With today's housing shortages in Southwest Colorado, many homeowners are turning to building their houses-to-be. But COVID-induced shortages are affecting building supplies -- and the cost of building your own home.

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Hey everyone,

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Dan Koreman here.

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Welcome to the Real Estate Update,

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brought to you by

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Alpenglow Properties,

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shining light on your

greatest investments.

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Thank you to the Local NEWS Network

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for keeping the content pumping

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over the last year.

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I'm so happy to be able

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to continue providing

valuable info to you.

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And it wouldn't be possible

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without Local NEWS Network.

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It's March 1st, 2021

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and spring is in the air.

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My wife's about to have our second child,

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and housing inventory

is at an all time low.

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Let's dig into it!

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Its safe to assume you all know

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what's going on out there.

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Pent up demand in awesome places to live,

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like Durango,

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has persisted through the pandemic.

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Many folks have turned

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to building their own home,

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and that is what we're going to

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be talking about today:

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home building.

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Sounds fairly straightforward, right?

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You buy a piece of land,

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you hire a general contractor,

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design a fantastically modern

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energy efficient home on your iPad

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and bam, you've got a home in 6 months.

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Well, not so fast.

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Builders have faced many headwinds

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over the last year.

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Creating increases in budgets

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due to lack of labor and materials.

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One such shortage

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was in the lumber industry.

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Industry experts say several events

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lead to a lumber shortage last year,

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including Covid-19 lockdown

orders and closures,

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directly affecting the supply chain,

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new safety protocols that

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slowed production at mills,

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and a spike in home remodeling

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while Americans were quarantined at home.

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This was all followed by

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a massive wildfire season,

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not just locally,

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but all over the world,

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directly affecting the supply as well.

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Millions of board feet of timber

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were wiped out in the

Oregon wildfires alone,

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and the southwest has been

hit hard in our supply.

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National Association of

Home Builders reports

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that between-mid April

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and mid-September last year,

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lumber prices soared more than 170%,

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adding over 16k to the price

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of a typical single family home build.

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While prices drifted

lower at the star of fall,

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they seem to be on the rise again.

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A good example of that is

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right here at our local Home Depo,

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where you can get a 4x8

sheet of OSB for $37,

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where that same sheet of

OSB last year was 8 bucks.

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At one point last year,

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I know builders that couldn't even

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get a GFCI Receptacle due to shortages.

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And while many manufactures

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are indeed getting production back online,

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it will be some time

before we see supply chains

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back to normal.

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Even then, we're not sure

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how the pricing will be affected,

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especially out here in Southwest Colorado.

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So something else to think about,

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if you're going to build a home,

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is where are you going to put that home?

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Pre-pandemic La Plata County

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had a plethora of land available for sale.

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Still kind of does.

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From March 1st, 2020 to March 1st, 2021,

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there were 408 residential

vacant land partials

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sold in La Plata.

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Sound low?

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Well, that's 2X last year,

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and 2X the year before that.

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So that shows that there already is,

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and will continue to be,

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a building boom in our area.

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There are 149 active residential lots

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available in La Plata County today.

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So we'll keep you updated

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on the rate of absorption,

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as we move into Q2 next month.

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We are watching the building

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and real estate industries closely,

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with hopes of pressure relief

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for both consumers and builders alike.

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No one wants their budget blown out by 30%

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because they didn't expect

a shortfall on materials.

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So its important to vet your builder

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early in the process

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to ensure their confident

in their numbers.

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If you ever want recommendations

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on our preferred vendors,

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we're always happy to suggest

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some of our favorites in town.

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Until then, we hope you

have a wonderful spring!

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It's time to start getting back outside,

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and I, for one, am very happy

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to do some exploring in our backyard.

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Thank you for watching this months episode

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of Durango Real Estate Update.

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If you'd like to follow

us on social media,

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you can find us on Facebook,

Instagram, and Twitter

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on the handle '@DurangoBrokers'.

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Or, feel free to email me any time at

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'Dan@AlpenglowProperties.com'.

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Have a beautiful March,

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stay strong, and be kind to each other.

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Thank you.

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