Why Are Home Prices Increasing?

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It’s a fact of life – the costs for everything continue to slowly increase year after year. Food. Gas. Clothing. We in the homebuilding industry are facing similar increases. The prices for lumber and other construction materials have skyrocketed in the past few months.

Ultimately, the cost of new homes is the result of a combination of external forces, including materials and labor, and the prices we charge reflect the status of the market. While we are anticipating price increases in the near future, Simms Development would like you to understand why prices are going up around the country.

Overall, 2017 has been an unusual year for rising costs. According to the Producer Price Index (PPI) released this month, 2017 has seen significant increases in the prices of softwood lumber, gypsum, ready-mix concrete and OSB. Each quarter has continued to show unprecedented volatility and insecurity.

In particular, prices for OSB have increased over 30% since the beginning of 2017, while the cost for softwood lumber has gone up over 14%. The current tariff dispute with the Canadian lumber industry is adding to the pressures. While the tariff increases are meant to protect US lumber producers, they are causing industry-wide issues for homebuilders, including shortages and price increases.

According to Robert Dietz, chief economist for the National Association of Home Builders (NAHB), demand for new homes has been strong. But “because of more expensive lumber, the prices for some homes will go up while they’re being built and other builders working under contract will take losses,” said homebuilder and NAHB chairman, Granger MacDonald.

This level of uncertainty, combined with an active hurricane season, increasing diesel fuel prices and ongoing labor shortages, has created a difficult situation for those of us in the home building industry. The bottom line: Our costs are rising, which means our prices will rise.

At Simms Development, we are committed to building our homes as economically as possible, using efficient building processes and highly skilled experts. Know that we increase prices only as made necessary by outside factors. We have stayed competitive in the market for over 60 years and plan to continue offering our homebuyers the best value we can.

Simms Development builds new urban townhomes in downtown Dayton and other surrounding areas including Centerville and Springboro, and Beavercreek, Ohio.  Please visit www.simmsdev.com for more information.

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