Low inventory and strong demand are expected to continue to drive the local residential construction industry through 2022. Residential construction will remain a positive sector of the economy, but will also face challenges stemming from the coronavirus pandemic. COVID-19.
The greater Knoxville area has reached record housing numbers over the past two years. Demand for housing in our area has never been higher, inventory of existing homes is at record levels, and available rental homes and apartments are extremely hard to come by. Prices are up in all areas. Entrepreneurs are struggling to keep up, and consumers are feeling the pain.
Homebuilders face a few challenges as they weather another productive but difficult year.
Higher material costs, supply chain delays
Skyrocketing lumber prices dominated industry news last year, with record price increases adding an estimated $36,000 to the cost of a new home, according to the National Home Builders Association. typical.
The rollercoaster prices have made it difficult for businesses to budget and plan for the year, especially small businesses like the majority of builders and contractors in our region.
Many other products and materials also increased. Appliances, doors and windows are all costing more, but lesser-known items like steel products, resins and plastics, copper pipes and laminate veneers have all increased.
It all adds up when building a home.
Not only have prices increased, but product availability is unpredictable – it can take weeks or months to receive items that previously only took days or a trip to the supplier across town.
Former Greater Knoxville Home Builders Association president John Cook of Cook Bros. Homes agrees that supply chain issues are problematic.
“Our business is going through it right now with everyone,” Cook said. “It is not a joke and it is not exaggerated or exaggerated. On the contrary, the problems are largely underestimated.
Labor shortages, skilled workers
The shortage of labor is serious in almost all sectors of activity.
National Association of Home Builders chief economist Robert Dietz said there are more than 400,000 job openings in our industry nationwide.
Dietz estimates the construction industry needs to add 740,000 workers a year to compensate for retirements and industry growth.
Local contractors are desperate for labor to meet the high demand, especially skilled workers like carpenters, electricians and plumbers. This is a great opportunity for young adults to embark on rewarding and successful careers in the trades.
Governor Bill Lee and Knox County Mayor Glenn Jacobs are establishing a local school to train a quality workforce in the construction industry, called the Skilled Trades Academy and Regional Training Center ( START).
The school is expected to start training students later this year. Other construction training programs are available through high school career technical education classes, community colleges, unions, and the Tennessee College of Applied Technology.
Anti-development groups, government restrictions
Neighborhood groups that oppose new real estate developments are not necessarily anti-development as a whole, they simply don’t want anything new in their “backyard”.
Developers build new neighborhoods to keep pace with population growth, usually in relatively predictable patterns and scheduled timelines. Most neighbors understand this process and accept it, but others may be upset.
The sudden arrival of people from all over the country put us in a crisis. The right solutions are not always easy to find, and opponents can become very vocal with government offices to deny or restrict new developments.
Currently, Knox, Blount and Loudon counties are facing land use issues. Planning departments or elected officials have pressed a pause to slow or halt certain developments, something homebuilders are opposing at a time when new housing is desperately needed.
Expect more growing pains as housing moves beyond Knox County’s borders into surrounding counties to meet demand. The National Association of Realtors polled more than 20 economics and housing experts to gauge their expectations for home price growth, new home sales and existing home sales for 2022.
Along with their technical predictions, the experts identified 10 “hidden gems” real estate markets across the country, and you guessed it, Knoxville made the list.
During the pandemic, it became apparent that many families needed more space. Homework and virtual classes have become routine. Home offices, study areas, gymnasiums, and outdoor entertaining spaces have become major renovation projects, and many of these amenities are now being added to new home construction plans.
“Renovation is expected to grow 6% this year, making it one of the strongest segments in the market,” Dietz said. “Rising home values have boosted equity, which will continue to fuel the renovation boom. After a 10% growth rate in 2021, it will cool to a 6% gain in 2022.”
Ashley Burnette is executive vice president of the Home Builders Association of Greater Knoxville, a residential trade association representing more than 300 member companies in 16 eastern Tennessee counties.