GRAND RAPIDS, Mich — There is good news and bad news for home buyers heading into fall.
The good news is the lumber shortage has slowed, and lumber prices have dropped.
"We're talking about a three fold reduction in price since its peak earlier this summer," said Bob Filka, CEO of the Home Builders Association of Michigan.
Lumber prices hit an all-time high this past summer, driving the price of new home builds up an extra $30,000 to $35,000. Filka said a big part of that were modern-day lumber barons "being greedy," and raising prices.
"Plus, we had a big spike in demand," said Filka. "When people were staying in, have been working home remotely and working on those home projects, building those decks, and suddenly had this tenfold increase in demand for lumber."
Another piece of good news heading into fall: There is a small slowdown in the market. However, that is cyclical, and typical this time of year.
"We've seen a small uptick in inventory," said Walter Perschbacher, Vice President of Greenridge Realty. "But in the greater scheme of everything going on, and how reduced everything has been, that uptick or rise really is, essentially, a drop in the bucket."
Now, the bad news. There are still many labor challenges, as well as shortages in other material than lumber affect new builds.
"We had high hopes in 2021 our supply issues would rectify themselves and things would come back to normal," said Karin Kay of Sable Homes, "and that has not been the case at all."
Kay said they have had to bring in new materials, as others become unavailable. It is affecting everything from vinyl, to roofing, tile, siding and windows.
RELATED: Why are there so many shortages?
Also, all those challenges combined create a longer timetable for new builds. Kay said what used to take four to five months, now takes closer to six to eight.
"I think we’ll see a very short window, where we see relief," said Kay. "And then, it’ll go back the same thing with delays and difficulty getting material."
Yet, many agree it is still worth it to buy or build during this time. Interest rates remain low, and appreciation does not appear to be slowing any time soon.
"After we came out of the pandemic, when we were in lockdown last year, the market accelerated," said Perschbacher, "and it hasn’t slowed down since. It will be a stronger fall and winter market than we would usually see."
The HBA of Michigan estimates about 17,000 new homes will be built by the end of 2021. That is an increase from previous estimates.
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"I anticipate that we'll continue to have tremendous appreciation," said Filka. "Particularly in those mid-price, mid-point priced homes, in all the markets across the state."
Perschbacher said to remember the inventory shortage is not something that happened overnight, but had been building the past 10 to 20 years. Things like zoning rules and regulations, lending requirements for builders and a booming West Michigan market have contributed to it.
"Buyer demand is still strong," said Perschbacher. "We have new buyers entering the market regularly, people relocating. So that supply demand issue we’re dealing with is still very real."
RELATED VIDEO: Lumber shortage impacting home builders
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