Plano North July 2021

2 0 2 1 R E A L E S T A T E E D I T I O N

C E L E B R A T I N G O V E R 3 0 Y E A R S I N T E X A S

There have been recent shortages of some key items in the supply chain for homebuilders and contractors.

Dallas-Fort Worth area builders this past year have seen skyrocketing costs for construction materials. Average cost per square foot (residential construction)

LUMBER

• Home frames • Walls

• Doors • Flooring

• Furniture • Cabinetry

SEMICONDUCTOR CHIPS

• Refrigerators • Televisions • Washers and dryers METALSCOPPER

• Smart home tech • LED bulbs • Other appliances

April 2020

$71.76

• Garage doors • Wiring

• Plumbing/ pipes

• Surfaces • Appliances

+17.8%

April 2021

$84.55

SOURCES: NATIONAL ASSOCIATION OF HOME BUILDERS, RESIDENTIAL STRATEGIES INC. COMMUNITY IMPACT NEWSPAPER

in some cases 100% cash down.” Jolly said his association is work- ing with the National Association of Realtors and state legislators to enact policies that would alleviate housing aordability and supply issues. One strategy is to ease VA and FHA loan restrictions around paying above-asking prices, he said. Land, supply chain complications Despite a lack of available space, interest from builders in Plano per- sists, particularly with an eye on multifamily developments. The city is just over 95% built-out, according to Plano ocials. “Long term, eventually, the answer is more units. … That’s going to require some new thinking, some new perspective on redevelopment of aging areas in Plano,” Jolly said. Driven by demand, developers are increasingly looking at less conven- tional routes to new homes. That may include converting commercial zoning to residential, Jolly said. “There is a lot of oce space that is vacant, and it may stay vacant for a long time as the workforce moves virtually,” he said. Of course, even when there is available land, disruptions to the supply chain have further compli- cated the job for homebuilders. According to the National Asso- ciation of Home Builders (NAHB), aggregate construction material costs are up 12% year-over-year and lumber costs have increased by as much as 300% since last April. And while contractors have had to deal with shortages and price spikes in the past, it is often just with one item at a given time. There are doc- umented issues with lumber, metals

and semiconductor chips, among other materials. Taken together, land and sup- ply chain challenges are helping to drive prices up. NAHB data suggests recent material cost increases have raised the price of a new single-fam- ily home by $36,000 over the past 12 months. What the future holds Experts do not predict a crash sim- ilar to what was experienced follow- ing the 2008 housing crisis. National statistics from the Mortgage Bank- ers Association indicate lenders are being more restrictive, according to Gaines. “[Mortgage] lending has not been excessive,” he said. “[Lenders are] requiring a higher FICO score, a lower debt-to-income ratio, and, in many cases, a higher down payment.” Interest rates have increased slightly since plummeting to historic lows at the beginning of the pan- demic, Thompson said. But they con- tinue to remain optimal for potential homebuyers looking to secure a low monthly payment. “Anything below 4% is still a beau- tiful interest rate on a mortgage,” she said. Relatively low interest rates will keep buyer demand high, Kelly said. This, coupledwith the fact that North Texas is a highly desirable place to live, means the Plano market could continue to re on all cylinders for the foreseeable future, he said. Steven Ryzewski contributed to this report.

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PLANO NORTH EDITION • JULY 2021

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