New Construction Pricing and Availability (Austin, McKinney: sale, new home, neighborhood)

[Rakin]

I had 2 very well known quality Builders tell me they are no longer letting people pick a lot and custom build a home. The Builders can no longer lock in a price on a home and promise a delivery date. Materials and labor costs are inflating to fast and too many shortages.

What they are doing are starting Speculative (Spec) homes on a limited basis and when they get to where the kitchen cabinets are installed they will have a price and will offer it to the people on their wait list. If you do not want it, they move on to the next Buyer. A Spec home allows them to work around shortages on what would be available.

This has never happened in our market before.

[ifew552]

In Austin, builders are doing something similar. Except when they are about five months out from the completion, they are opening up the sale for a week and they are letting people bid. People are bidding well over 20% over the asking price from builders to make a purchase on spec home. Crazy.

[Leonard123]

A lot of builders aren't selling at all and can't say when they will. That's been the case for a few months. I'm not sure if it's limited to certain communities, but it appears Pulte is planning to auction their spec homes in at least one community in McKinney. American Legend is planning to sell specs only for one of its communities.

I can't help but wonder how many of these buyers really need to move and fall in love with a particular home and neighborhood or if they are just doing it because everyone else is doing it and all the PR some areas get. I'm getting a strong sense this is becoming like the grocery and toilet paper panic buying we saw last year.

What gets me is that the areas people are pouring the most money into are some of the least attractive and least convenient, and the design trends and floor plans builders are putting out these days are awful.

It wouldn't surprise me the least if the next thing you know, builders start selling "as is." It's almost like the uglier and worse they make it and the worse their customer service, the more people will pay.

[4Movingeast]

My husband's company (lumber) has had a moratorium on new customers for 6 weeks. No quotes, nothing. They don't have the wood, they don't have trucks, and they don't have labor to run the saws/work in the plant.

[Leonard123]

Originally Posted by 4Movingeast

My husband's company (lumber) has had a moratorium on new customers for 6 weeks. No quotes, nothing. They don't have the wood, they don't have trucks, and they don't have labor to run the saws/work in the plant.

Just out of curiosity, where have all the workers gone?

It would seem the money for the price increases should be used to invest in increasing production. I can't help but wonder why that isn't happening and exactly which individuals are getting this money and how they are using it.

Not that it matters with regard to home building. Even if lumber were to go back to the costs and production levels of a year or two ago (which it won't), we know the builders wouldn't change their prices given that people are clearly willing and able to pay the higher prices and then some.

I have to think though that the gap between new construction and existing homes can only go so far. I think many existing homes are being listed and appraised far too low given the offers received for them. In this market, I wouldn't think a small number of comps from even a month ago would or should mean anything.

[mikestrong]

Originally Posted by Leonard123

A lot of builders aren't selling at all and can't say when they will. That's been the case for a few months. I'm not sure if it's limited to certain communities, but it appears Pulte is planning to auction their spec homes in at least one community in McKinney. American Legend is planning to sell specs only for one of its communities.

I can't help but wonder how many of these buyers really need to move and fall in love with a particular home and neighborhood or if they are just doing it because everyone else is doing it and all the PR some areas get. I'm getting a strong sense this is becoming like the grocery and toilet paper panic buying we saw last year.

What gets me is that the areas people are pouring the most money into are some of the least attractive and least convenient, and the design trends and floor plans builders are putting out these days are awful.

It wouldn't surprise me the least if the next thing you know, builders start selling "as is." It's almost like the uglier and worse they make it and the worse their customer service, the more people will pay.

Pulte in Mckinney has no spec homes nor is planning build any. They are going to take bids on lots when more are released later in the summer for people to bid on. Highest bid on lot will let buyer get to build plan they choose, but not specs at all. FYI.

[jiping]

Paying people to stay at home has worked very well.

[LocalPlanner]

Originally Posted by jiping

Paying people to stay at home has worked very well.

That's likely true for really low-paid service jobs, but I'm not sure that applies to the supply chains for home building.

[Leonard123]

Originally Posted by mikestrong

Pulte in Mckinney has no spec homes nor is planning build any. They are going to take bids on lots when more are released later in the summer for people to bid on. Highest bid on lot will let buyer get to build plan they choose, but not specs at all. FYI.

Thanks for clarifying. I wouldn't pay 2 cents for a lot up there myself. I'm kind of surprised. For reasons I cannot fully understand, McKinney has not been growing much lately, and it seems to be substantially less of a seller's market than surrounding cities. Prices haven't really gone up much at all the past year from what I've seen.

[mikestrong]

Originally Posted by Leonard123

Thanks for clarifying. I wouldn't pay 2 cents for a lot up there myself. I'm kind of surprised. For reasons I cannot fully understand, McKinney has not been growing much lately, and it seems to be substantially less of a seller's market than surrounding cities. Prices haven't really gone up much at all the past year from what I've seen.

The Mckinney community is one of the busiest in DFW right now. They have over 400 people on the waiting list to bid. The prices in the community have gone up 45k in 3 months. They have sold 38 homes in 3 months and that was capped due to demand. Not sure where you get Mckinney is not growing much. lol The only issue in Mckinney is the builders burned thru most of their communities at the end of last year way ahead of time and there is a shortage of new home communities until the end this year.