Pandemic has varied effects on residential construction

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Remodel or build?

Pandemic has varied effects on residential construction

written by JENNIFER A. FITCH

From significant disruptions in the supply chain to increased demand for home offices, the effects of the COVID-19 pandemic have upended the homeconstruction industry.

Low interest rates for mortgages and loans, though, are helping drive enthusiasm for construction projects.

Today’s average buyers for new homes have already owned one or two houses in the past, are considering downsizing, and are shopping the medium- to larger-model single-story options, according to Carl Vogel, sales manager for Oliver Homes.

“We’re building lots of one-story homes,” he said.

With Realtors reporting dramatically low inventory of existing houses, Vogel said he feels new construction can be a viable option at a price point that is comparable to an existing home that needs renovations. He added that new homes have warranties and energy-efficient construction.

Richard Betson from Antietam Builders said his company doesn’t build many new homes, but, with its renovations focus, like Vogel, he has gotten increasingly more requests for home offices and rooms where children can do online learning.

“A lot of people are working out of their living rooms and things like that,” Betson said, and customers are choosing custom outdoor spaces. “They want to have a whole screened room for if they have to move out there to work.”

A Redfin report from January described a drop-off in active sales listings, noting 528,903 listings nationwide was an all-time low. The same report found homebuyer demand was up 50% from pre-pandemic levels.

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This Hagerstown home, a Lexington model with a suite at the rear of three-car garage, was built by Oliver Homes. Homeowners often want a suite to accommodate in-laws, grandparents or individuals with disabilities. Submitted photo

The National Association of Home Builders noted strong confidence in the remodeling industry, based on a survey of those working in the industry.

“The remodeling market was consistently strong throughout 2020, as homeowners had more time on their hands to improve their homes and add space and efficiency,” NAHB Remodelers Chair Tom Ashley Jr. said in a news release. “However, activity slowed a bit at the end of the year as a result of the rising COVID-19 cases and an increase in economic insecurity.”

The coronavirus has impacted the remodeling industry directly and indirectly, Betson said.

One major consideration is that if someone on a job site falls ill, the crew has to be isolated due to possible exposure.

“It has been very hard to fiddle around with that,” Betson said.

Greatly increased prices for building supplies and issues within the supply chain have affected the industry. A sheet of plywood that cost $8 in early 2020 was priced starting at $24 a year later.

Betson said he knows a builder who refunded the payments on eight new homes because the higher costs of supplies would have eliminated all of his profits. The tripling of prices is estimated to add $30,000 to $40,000 to a new build.

Suppliers shutting down for 14 days after COVID-19 diagnoses and changes in the ways permits are issued also create trials. Some inspectors are doing their work via videoconference, asking contractors to walk around a home and show them on video things such as wiring.

“It has been challenging, that is for sure,” Betson said. Keeping homeowners updated

One important aspect during pandemic-era construction is communicating updates to homeowners as much as possible, Betson said. That often means explaining that several stops are required to find enough shingles or siding that match, windows are delayed by several weeks or permits are delayed.

Total housing starts in the United States in 2020 were 1.38 million, which the National Association of Home Builders said was a 7% increase over 2019.

Vogel said Oliver Homes does semi-custom projects that start with a general design modified to meet buyers’ needs.

“Every year, we are doing homes with suites for extended family,” he said, explaining that homeowners often want to accommodate in-laws, grandparents or individuals with disabilities. “That is a regular thing we do.”

In January, Redfin chief economist Daryl Fairweather commented that homebuyers were moving quickly to scoop up every property that came on the market. He said pending action from the Biden administration could drive up interest rates, but added that the impact could be small because the Federal Reserve signaled commitment to keeping rates low.

“Many homeowners are staying put instead of selling because of the difficulty of finding a new home, even though they could command top dollar for their listing. As we move forward, all eyes will be on mortgage rates, which are historically low now, but may not stay that way for long,” he said in a news release. — Places