Real Estate Buyers

Vaccines, Stimulus Are Fueling Seller Optimism

Americans are more upbeat about the idea of selling, particularly as the vaccine rollout continues and latest round of stimulus checks are distributed. That could come as hopeful news as many markets face severe housing shortages and buyers are increasingly being left with few choices of homes for sale.

Fannie Mae’s Home Purchase Sentiment Index rose by 5.2 points in March to a reading of 81.7. The components on the index that increased the most last month related to home selling and buying, household income, and home prices.

“The significant increase in the HPSI in March reflects consumer optimism toward the housing market and larger economy as vaccinations continue to roll out, a third round of stimulus checks was distributed, and this spring home buying season began—perhaps with even more intensity this year, since 2020’s spring homebuying season was limited by virus-related lockdowns,” says Doug Duncan, Fannie Mae’s senior vice president and chief economist.

The measure over home-selling sentiment moved higher across most consumer segments and reached nearly pre-pandemic levels, Duncan notes. That is “generally indicative of a strong seller’s market,” he notes. “Consumers once again cited high home prices and tight inventory as primary reasons why it’s a good time to sell.”

More Americans also reported it’s a “good time to buy” in the March survey compared to February, likely still being drawn to historically low mortgage rates despite recent upticks. However, that measure on home-buying sentiment still lags behind pre-pandemic levels. The home-buying experience is proving difficult due to rapidly rising home prices and a lack of housing supply, Duncan adds.

Here’s a closer look at indicators from March’s Fannie Mae’s Home Purchase Sentiment Index, reflecting responses from nearly 1,000 consumers over the housing market:

  • 61% of consumers said it’s a good time to sell, up from 55% in February.

  • 53% of consumers said it’s a good time to buy a home, up from 48% in February.

  • 50% of Americans surveyed believe home prices will go up over the next 12 months, up from 47% the month prior.

  • 54% of consumers expect mortgage rates to increase over the next year, up from 47% a month earlier.

  • 82% of Americans say they are not concerned about losing their job over the next 12 months, unchanged from February.

  • 25% of respondents said their household income is significantly higher than it was 12 months ago, up from 17% in February.

 

Source: “Home Purchase Sentiment Index,” Fannie Mae (April 7, 2021)

Luck, Superstition May Influence Real Estate Decisions

Many Americans admit to being superstitious when it comes to choosing what home to buy—in fact, they say if a home feels unlucky, they aren’t buying it. More than a third—or 38%—of Americans have decided against buying a home because of superstition, according to a newly released survey from LendingTree of about 1,500 Americans. And consumers who find their self-described lucky house are willing to pay even more for it.

 

Reasons some consumers reconsidered a home purchase due to luck or superstition

                                                                                                                                                               

Source: LendingTree survey of 1,550 consumers conducted Feb. 19-22, 2021. Only those who chose not to buy a certain home due to luck or superstition answered this question. 

Homes a buyer perceives as lucky can nab more at resale. Nearly 47% of survey respondents say they would blow their budget for a lucky house—and are willing to go an average of $38,000 above their range for the home, the LendingTree survey shows. What qualifies as a lucky home? More than a third of buyers say they’d pay extra for a home whose street number was their lucky number.

The younger generations appear to be the most superstitious in real estate—55% of Gen Z and 50% of millennials said they’ve bypassed a home because of something related to luck or superstition. Overall, men are more likely than women to decide against buying a particular home because of superstition, at 51% of men and 37% of women.

Here are some additional findings from the LendingTree survey:

  • 39% of homeowners refuse to live next to a cemetery.

  • 32% would not buy a home with an unlucky street number. (On the other hand, the majority of respondents did say they’d buy a house with an unlucky street number like 13 or 666, but 20% would prefer to pay less because of it.)

  • 30% say they would not buy a home where the previous owners experienced a tragedy inside the home, like death.

  • 43% say they have at least one deal breaker related to the home’s feng shui, with the most cited reasons being a staircase that faces the front door, back and front doors in the same path, or a bathroom door that faces the front door.

  • 43% of survey respondents who reported being previous home sellers said they’ve had difficulties selling their home due to superstitious buyers.

 

Source: "Nearly Half of Americans Would Burst Their Budget for a "Lucky" Home," LendingTree (March 16, 2021)

The Top Green Features Buyers Seek in New Homes

Energy efficiency is on many buyers’ minds when they shop for new-home construction, according to a consumer survey from the National Association of Home Buyers. The NAHB surveyed more than 3,000 home buyers—both recent and prospective—on the features they most desire in their new home.

Many buyers said they’d go with the more sustainable option, such as the use of more durable materials in their home, when presented the option.

When the cost savings of these features are pointed out, they may be even more tempted—and they say they are willing to pay up front to help lower their utility bills. On average, buyers would pay up to $9,292 more for a home in order to save $1,000 annually on utility costs, according to the NAHB’s study.

“We’re doing a lot more in our homes now,” Brandon Bryant, founder of Red Tree Builders, a green home building company in Asheville, N.C., said during February’s virtual 2021 International Builders’ Show. But he added education is key. “We’ve got to teach people how to live in green homes, how these homes operate, and even before we build to let them know what we could do because a lot of times we could do so much more for their life.”

The top eco-friendly components and designs consumers said they desired:

  • Energy Star–rated windows and appliances

  • Efficient lighting that uses less energy than traditional bulbs

  • Energy Star rating for the whole house

Other trending features center around health and wellness, such as zone heating, purified air appliances (like UVC fans), indoor air quality sensors, and connections to the outdoors, the NAHB said.

"There are a wide range of green features that buyers feel are desirable," said Paul Emrath, vice president of surveys and housing policy research at the NAHB. "Energy efficiency, though, tops the list of what they most want."

 

Source: National Association of Home Builders

The Brighter Path Ahead

More inventory and better access to vaccines are welcome news.

Courtesy of Lawrence Yun

The 2020 pandemic-induced recession was unique in terms of the sudden and massive slashing of jobs. It was also the first recession during which overall income grew. No doubt there are families struggling paycheck to paycheck, but due to the massive stimulus packages—including the initial deposit of $1,200 and enhanced unemployment benefits—the financial condition of many families was better in a recession than before the pandemic.

Total income for the country in late 2020 was 4% higher than a year earlier. This was the figure reported just before the second stimulus checks of $600 per person went out in late December. It also does not include wealth accumulation from the record-high stock market or rising home prices. Also not reflected in the totals are the proceeds from mortgage refinances last year or the relief expected from a new stimulus. Still consumers remain cautious, as spending opportunities have been restricted by COVID-19. For the year, consumer spending fell by 2%. And the savings rate consequently rose to twice the pre-pandemic levels.

The situation translates into the potential for a great unleashing of spending in 2021. The positive impact will be increasingly felt as jobs come around. The full effect will be evident once herd immunity is established with the vaccine, likely in autumn. That is to say, 2021 is a growth year that will take us out of the recession.

The housing market continues to shine brightly. The main frustration is for buyers who find themselves outbid during multiple offer situations. More inventory is needed to give buyers more options and lessen the heat.

It's encouraging to see that builders are ramping up production of homes with backyards, which are now at their highest level in 13 years. Activity has been particularly robust in Southern states where land is more plentiful and building regulations are less onerous.

Moreover, with the wider availability of COVID-19 vaccines, homeowners, especially older Americans, who have been more hesitant about strangers visiting their homes, now may be more ready to list. Many seniors own their homes outright and have sizable housing equity for their next home purchase. They may even need to buy a larger place to accommodate more family visitors. After all, in the new economy, remote-work flexibility may mean more days working from grandma’s house.

 

Lawrence Yun, Chief Economist and Senior Vice President of Research at the National Association of REALTORS®


Mortgage Rates Rise But Stay Near Historic Lows

The 30-year fixed-rate mortgage came off its recent all-time lows to average near 3% last week. The 10-year Treasury yield, which mortgage rates closely follow, hit its highest level in the past year, prompting the increase in rates.

“As the economic recovery progresses, mortgage rates are expected to rise further in the upcoming months,” writes Nadia Evangelou, senior economist and director of forecasting at the National Association of REALTORS®, for the association’s Economists’ Outlook blog. “Nevertheless, the upcoming rise in mortgage rates should not be alarming to would-be home buyers. The Federal Reserve recently assured that it would keep interest rates unchanged for a long time.”

Rates continue to remain near historic lows, said Sam Khater, Freddie Mac’s chief economist. The all-time low for the 30-year fixed-rate mortgage was set in January, averaging 2.65%.

Freddie Mac reports the following national averages with mortgage rates for the week ending Feb. 25:

  • 30-year fixed-rate mortgages: averaged 2.97%, with an average 0.6 point, up from last week’s 2.81% average. Last year at this time, 30-year rates averaged 3.45%.

  • 15-year fixed-rate mortgages: averaged 2.34%, with an average 0.6 point, rising from last week’s 2.21% average. A year ago, 15-year rates averaged 2.95%.

  • 5-year hybrid adjustable-rate mortgages: averaged 2.99%, with an average 0.1 point, rising from last week’s 2.77% average. A year ago, 5-year ARMs averaged 3.20%.

Freddie Mac reports average points along with average commitment rates to better reflect the total upfront cost of obtaining the mortgage.

Source: Freddie Mac and "Instant Reaction: Mortgage Rates, February 25, 2021," National Association of REALTORS® Economists’ Outlook blog (Feb. 25, 2021)

 

Want To Build Your Own House? The Pros, Cons, and Costs

Building a brand-new home may sound like a dream come true. You get to choose the ideal layout for your family’s needs, and have a say in each and every design element. However, the process may also be daunting if you’ve never done it before.

To help you through it, we’ve created this Guide To Building Your Own Home. It will provide all the detailed information you need at each stage of the home-building process so that everything goes as smoothly as possible.

By Erica Sweeney, realtor.com 

In this first article, we’ll offer a glimpse into the pros and cons of building a house, including how much it costs, how long it takes, how it's financed, and much more that will help you decide if this option is right for you.

Pro: You can get exactly what you want

Building a home is a popular option these days. Construction on single-family homes was up 10% in November 2020 compared with the previous year, according to the National Association of Home Builders. And, it makes sense: When you build your own home, you get exactly what you want: an in-law suite for when the grandparents visit, a decked-out office for working from home, midcentury modern style, and more. Anything is possible.

“You get a blank slate,” says Marc Rousso, CEO of JayMarc Homes in Seattle. “The fun part about building a custom home is that it can be whatever you want.”

That might sound overwhelming, so Rousso suggests starting with a vision board. Check out websites like Houzz or Pinterest, and drive around snapping photos of homes you like. Then think through how big you want the home to be, how many bedrooms and bathrooms you need, and the bonus spaces you want to live as comfortably as possible.

The best way to make sure you get what you want (and that it fits within your budget): Hire a great builder from the start. This crucial step sets the best possible foundation (in every sense of the word) for your new home. Builders help you select others on your team (such as an architect, interior designer, and landscaper) and serve as your point person throughout the process.

Not sure how find a homebuilder? NAHB offers an online directory, and its members are committed to ongoing education and ethical standards. Hiring builders who have been in business for several years is also a plus, as they’ve proven they can weather both the highs and lows of economic cycles.

Pro: You can build just about anywhere you want

Have you always dreamed of living by the water or having a mountain view? Or maybe you want no neighbors in sight? Building a home lets you set up your residence just about anywhere you want.

Talk to your builder before making a land purchase, though, Rousso urges. The builder will need to do a feasibility study on the land to make sure it’s a suitable place for the home you want to build.

“We've talked more people out of buying land than into buying land, because there are so many pitfalls,” he explains.

Builders help make sure the land is zoned for residential development and identify any issues with building on the site, such as connecting to utilities or developing the land before building can start.

Another thing to note: Land development can be costly. HomeAdvisor estimates it to be $1.30 to $2 per square foot of land, including surveying, drainage plans, utility and septic mapping, permits, soil testing, land clearing, excavation, and demolishing any existing structures.

Pro: New homes typically come with less maintenance

An obvious advantage of building a home is that everything is brand-new. That means maintenance and repairs will be minimal or even nonexistent for a while, saving you plenty of headaches and thousands of dollars a year. According to HomeAdvisor, in 2020, homeowners spent an average of about $3,200 on home maintenance.

Nonetheless, a new house isn't entirely maintenance-free. You’ll probably still need to do yardwork to keep up your newly installed landscaping. And you may want to pay for some preventive upkeep, such as a maintenance contract on your HVAC system, costing $150 to $500 a year. But that could save you money in the long run.

Con: Building usually costs more than buying an existing home

Building a house is an expensive enterprise, and typically costs more than buying a preexisting home. As such, you'll need to have some in-depth discussions with your builder on what you want, and whether it's affordable for you.

“A builder can help guide the design process starting with schematic design to give the prospective client an idea of the budget,” says Tim Benkowski, senior project manager at Balsitis Contracting in Lake Geneva, WI. “That way, design revisions can be made early without the owner falling in love with a home design only to find out they need to cut out their favorite parts or reduce the project scope.”

Several factors determine how much your newly constructed home will cost: location, size, complexity, and design elements.

The NAHB estimates that the median price of constructing a single-family home is $289,415, or $103 per square foot. Labor typically constitutes about 40% of the cost, followed by permits, design fees, and materials.

Con: Getting a construction loan can be complicated

To finance building a home, you’ll need a construction loan, which is a little more involved than getting a traditional mortgage to buy a preexisting house, says Steve Kaminski, head of residential lending at TD Bank.

For starters, you’ll likely need a 20% down payment since construction loans are considered higher-risk. Along with the usual financial documents needed for your loan application, you need to provide project plans, costs, and land value. You also need a signed contract or purchase contract with the project’s plans, specs, and budget details, and a timeline for the construction.

“The lender is not only evaluating the borrower, but also the project plans and oftentimes the builder to ensure they will be financially solvent throughout construction,” Kaminski explains.

Construction loans are usually shorter-term, covering just the duration of the build, and may have higher interest rates, usually about 1% higher than conventional mortgages, according to the Consumer Financial Protection Bureau.

Once the home is completed, you can pay off the balance or convert the loan to a conventional mortgage. The interest rate and the type and terms of the mortgage will depend on your credit history and lender.

When shopping around for a mortgage for a new home build, Kaminski urges borrowers to go with a lender experienced in working with construction loans.

Con: Building a home takes a while

Generally, it takes a bare minimum of three months to build a simple house, and it can take much longer. But it’s a “sliding scale,” says Benkowski. “A 2,500-square-foot and under [home] can typically be completed in seven to nine months with proper planning. A 7,500-square-foot home and up would likely take 12 to 30 months.”

Planning as much as you can will keep the project on track. Still, delays do happen. Weather is the biggest one, with temperature shifts and rain or snow postponing work. Your own choices could also be to blame. If you’re taking too long to choose your favorite flooring or windows, it could make it all take a little longer.

Erica Sweeney is a writer whose work has appeared in the New York Times, Parade, HuffPost, and other publications.

 

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Improvements First-Time Homeowners Should Tackle First

While low mortgage rates and the COVID-19 pandemic continue to motivate first-time buyers, other factors need to figure into their financial planning. Tight inventory markets mean many home shoppers will end up purchasing a house that requires repairs to its structure and mechanical systems, which will take a big bite out of their budget.

By Barbara Ballinger

Owning a home is a significant financial investment. These 10 tips will help you prepare for maintenance and repair costs, too.

3 Takeaways: 

  • First-time buyers should look beyond the shiny new kitchen and consider problematic signs in a listing.

  • Chimney inspections can point out crumbling mortar and problems with flashings, flue liners, and the flue itself.

  • Homes without good gutters and downspouts may have problems with interior leaks.

First-time buyers may want to look beyond the shiny new kitchen and sizable outdoor space and consider problematic signs, such as a leaky roof, cracked pipes, or inefficient air leaks. A thorough home inspection is good a start, yet, some buyers are willing to waive the inspection to make their offer more appealing to sellers in today’s competitive market. Although, they should know the risks involved when purchasing without an inspection.

All too often, homeowners—especially those buying a fixer-upper—focus on aesthetics, like gleaming subway tiles they plan to install along a kitchen backsplash or how they’ll transform a yard into a mediation retreat. They can’t forget about the issues that must take priority. Houses age just as people do, and they require regular checkups, repairs, and new parts, akin to our doctor visits, medications, and surgeries.

“So many homeowners buy a house for a lifestyle rather than for economic reasons, so they tend to think about the glitzy stuff rather than what’s behind the walls and sometimes not visible,” says Jennifer Ames, a salesperson with Engel and Volkers' Chicago office.

While it’s less joyful to spend money on replacing a furnace or roof than updating an old bathroom or porch, it’s critical to do so to protect an investment. Due diligence can also help lower heating and cooling bills and pare down other costs. Homebuyers should have specialists perform ongoing maintenance and to not put off repairs that may become more expensive if left untended. Some might even lead to health issues, such as mold.

1. Keep away rain. Climate changes have brought heavy rains and storms to more parts of the country, and homes without good gutters and downspouts may have problems with interior leaks and standing water in the yard.

A home’s gutters should be pitched away from the house and be wide enough to carry water without leaves getting clogged—ideally 6 inches rather than the traditional 4 inches.

Downspouts should extend 5 feet from the home’s foundation so water won’t collect near the home and leak inside, potentially causing mold.

Gutters should be cleared annually or semi-annually. An expert should periodically check wood fascia boards behind gutters, which may rot over time. Also, installing a drip edge to the roof’s plywood decking to keep water from getting underneath. In addition, the landscape should be regraded if the yard slants downward toward the house.

2. Tighten the envelope. Homes that are not well sealed allow warm air to escape in winter and cool air in summer. It also makes it easier for bugs and rodents to find their way inside. Hire an expert to perform an assessment. The assessment provides a number that indicates how leaky a house is, and directs a homeowner to undertake changes, such as using caulk to seal around windows, air ducts, and areas where the walls meet the foundation. In addition to lowering energy costs, this also prevents pollutants and humidity from entering the home.

Historically, most homeowners who add insulation choose foam or mineral wool, but many building codes now require tighter envelopes, so the industry is moving toward blown-in rockwool, fiberglass, and cellulose.

Another way to keep out insects and rodents is to use inert pesticides like boric acid.

3. Maintain a stable foundation. Cracks in a foundation require prompt attention so they don’t spread and cause more severe problems. Cracks develop for all sorts of reasons, from climate fluctuations to age to land sloping toward the house. A structural engineer should be hired to do an assessment and help the homeowners develop a solution, such as waterproofing a basement and foundation down to the footings or installing a sump pump and battery backup system to remove future water. Telltale signs of a wet basement may be stains on walls or bad odors from moisture.  

4. Inspect the roof. Unless it’s a simple case of a roof missing a few shingles, a home’s topmost layer can become an expensive repair if it’s old or badly damaged. Buyers should ask sellers the age of the roof and how it was constructed. The best shingle roofs also have a good underlayment and decking underneath.

Flashing, a plumbing stack, chimneys, and skylights should also be inspected before purchase because rain, animals, and debris can find their way into openings. A metal roof will last longer—50 to 100 years versus a shingle roof’s 30 years—but its costs can be four times higher. Homeowners may find it useful to have an annual roof inspection to check for storm damage. Also, they should perform their own visual inspection by noting discoloration or curled or missing shingles.

5. Update lighting. Old incandescent lightbulbs increase energy costs and have a short life span. LEDs are an easy, affordable upgrade that require far fewer changes and are much more efficient. Choose LEDs with a 2,600 to 3,000 K (kelvin) measurement that produces a warm color, similar to 60-watt incandescent. Because LED bulbs come in a wide variety of shades, trying out one to see if it appeals before buying for an entire house. Also, avoiding compact fluorescent lights, which take time to warm up and can be overly bright, almost like a floodlight.

6. Add air conditioning. With much of the country experiencing more extreme heat, many new homeowners may find that fans aren’t sufficient to cool a home. Window AC units work, but don’t cool a house efficiently and are less visually appealing. A quality AC system will provide a good return on investment at resale.

A split system to lower energy costs since each room can be separately controlled. However, the costs are greater than one central system—sometimes 50 percent more—though they will help save money over time. Some companies recommend adding an ultraviolet light system to kill mold, bacteria, and viruses from being circulated, which many homeowners have started to do since the onset of the pandemic.

7. Prepare for outages. Many experts believe electricity outages will continue to be a problem in certain parts of the country. A generator is a wise investment, especially if outages grow longer and more frequent. Homeowners can still benefit from the federal solar tax credit if they invest in a solar-battery backup system.

A battery backup attached to a solar array could be connected to a single circuit to extend the life of the battery’s charge. On average, costs might run from $25,000 to $40,000. Less costly, but also less environmentally friendly, is a diesel generator system, which may run between $18,000 and $22,000 for a 3,000-square-foot home, or $5,000 to $8,000 for a smaller unit that powers kitchen appliances and some lights. Besides cost, it works for longer periods without needing to be recharged like a solar system.

8. Maintain wood. Wood adds charm to a home, whether through siding, flooring, railings, or a deck. But it also requires regular maintenance. Boards—even new ones—can rot due to weather and insects. Another culprit is the type of wood used today. A century ago, the center of trees was used for boards, which made them sturdier than today’s wood planks that are made from the entire tree and its pulp. That means they also carry more moisture, and therefore rot faster. Pressure washing a house to remove mold and sealing wood well with quality paint will reduce this.

9. Remember tree care. Trees are a beautiful addition to a property, providing shade in summer and picturesque snow-covered branches in winter. But they should not be overlooked by homeowners when it comes to their care. Big limbs may come down during storms, insects can feast on wood, and spreading tree roots may clog sewers. New homeowners should hire an arborist to examine their site’s trees when they move in and have limbs pruned periodically. Diseased trees should be promptly removed to prevent spread.

10. All things chimney. A stately chimney adds elegance to a home, the equivalent of icing on a cake. But if it’s not tended to, moisture can enter, along with animals and other debris. A cap will help, as will inspections to point out crumbling mortar and problems with flashings, flue liners, and the flue itself. Keeping all parts in shape will also improve the air quality in a house and allow smoke to exit more freely when the fireplace is used. If a chimney has significantly deteriorated, the home buyer will have to decide whether to take it down to the roof level and sheathe it over with shingles or to have it repaired. Another factor may be cost, which can vary greatly. A third factor may be if the house is located in a historic neighborhood and exterior parts must be retained according to a municipality’s rules.

Barbara Ballinger; Barbara is a freelance writer for REALTOR Magazine and the author of several books on real estate, architecture, and remodeling.

Shhhh! When a Home Is Too Loud

The ability to work from home during the pandemic has been a blessing for many people, but it’s also made some acutely aware of the absence of one element helpful for productivity: quiet.

By Melissa Dittmann Tracey

With many people working or studying remotely, these strategies may help cut down the noise.

Many have taken to barricading themselves in closets or hiding in their cars to insulate themselves from chatty household members or noisy street sounds. Echo-prone open floor plans have exacerbated the problem as family members concurrently try to do their jobs or attend remote school.

Enter acoustic consultants, armed with sound- proof design techniques and technology to bring some peace and quiet to home environments. Real estate pros can benefit from learning about these enhancements, which can be a valuable amenity for resale, especially for a home on a busy street.

“The pandemic has forced people to look at their home’s acoustics very differently,” says Bonnie Schnitta, founder and CEO of SoundSense, an acoustic consulting company based in Wainscott, N.Y.

Since the start of the pandemic, Schnitta’s firm has been fielding more calls from real estate professionals and homeowners about noisy plumbing, loud traffic, and household sounds amplified by open floor plans. During site visits, they’ll calculate precisely how sound reverberates in a space and offer a range of solutions, such as adding sound-absorbing fabric or foam behind wall hangings or underneath rugs. While these fixes aren’t cheap—consultation fees start at $900—many find the results are worth it.

Real estate professionals are getting help for listings with challenging acoustics. For one hard-to-sell home on a noisy street, Schnitta suggested adding a water feature in the front yard swimming pool, which, combined with a barrier, masked the road noise. The home sold two weeks later. “You can rarely completely erase road noise, but there are ways you can mitigate it,” she says.

Noise can impact resale. A 2017 realtor.com® study showed that sellers of homes within a 2-mile radius of an airport tended to see discounted prices of 13.2% compared to similar homes elsewhere in the same ZIP code. Sellers near train tracks saw average discounts of 12.3%, followed by 11.3% for nearby noisy highways.

The luxury Mozaic at Union Station Apartments in downtown Los Angeles addressed street noise issues by teaming with Veneklasen Associates, an acoustics firm, to work on soundproofing. Because 90% of outside noise entering an apartment comes through windows, behind the existing double-pane windows, they installed secondary, noise-mitigating windows that dampen sound vibrations and prevent sound leaks using recording studio-style soundproofing technology.

Window add-ons from Soundproof Windows Inc. cost $790 to $1,070 apiece, while a sliding glass door insert sells for about $1,600.

Noise reduction can be as simple as adding a $50 door seal or as complex as spending $10,000 or more for full-home soundproofing. Here’s a range of recommendations from acoustic consultants:

  • Cover hard surfaces. Hard, highly reflective surfaces are among the worst sound offenders. Use softer materials, such as area rugs with a sound-absorbing pad underneath and fabric-covered furniture, suggests Audimute, an acoustic design consultation firm.

  • Reduce echoes in open spaces. In open floor plans, sound can bounce everywhere. SoundSense and Audimute offer fabric-covered panels to add onto walls for sound absorption. Or try bookcases—even just half-full—against walls to help absorb sounds. Artwork can also be used as a sound barrier. SoundSense makes a Paradise Foam product, which can be tucked behind canvased art to mitigate noise.

  • Seal doors and windows. Soundproofing companies offer acoustic door seal kits that fit snugly around doors or window edges to reduce sound coming through cracks.

  • Add sound-absorbing shades or drapes. Roman shades, using heavy fabric, can help reduce noise, as can cellular shades and plantation shutters. Heavy drapes and curtains—think suede or velvet—are also effective at absorbing outside noise.

  • Go green. In addition to improving air quality, houseplants can help reduce noise. (They’re most beneficial on hard-surface floors.) Consider a tall, potted Norfolk pine in room corners, Schnitta says. Sound will bounce from the wall onto the foliage instead of throughout the room.

“When [buyers] walk into a home and hear an echo, it can be a turnoff,” Schnitta says. In a listing, “there are several inexpensive things you can do: Put in an area rug with a specialized pad. Put a plant in the corner, even if it’s artificial. Add a bookcase. All of this can make a big difference when it comes to sound.”

 

Melissa Dittmann Tracey is a contributing editor for REALTOR® Magazine. 

Lumber Takes a Fall

Builders and home buyers paid the price as supplies dropped, but the outlook for new construction is improving.

Key takeaways:

  • COVID-19 dramatically disrupted the lumber supply chain affecting home building.

  • Lumber prices have been highly volatile since the spring.

  • An uptick in home remodeling has further squeezed the lumber market and contributed to rising prices.

 

By Daniel Bortz

Last spring, the coronavirus pandemic ground several large lumber mills in the U.S. to a halt—and homebuilders suffered the consequences.

Take Jesse Fowler, for example. Fowler, the president of Tellus Design + Build, a full-service general contractor based in Southern California, said in an interview with REALTOR® Magazine in November that lumber prices for his company had “gone through the roof.” “It’s tough on our business because we have to play the middleman and negotiate lumber prices for our clients,” Fowler said. In one instance, he said, a framer charged one of his clients who was building a new home $90,000 over what was originally estimated to compensate for rising lumber costs.

The COVID-19 crisis and the constraints it has put on the nation’s lumber production aren’t the only factors that have jacked up lumber prices. “Our lumber tariffs with Canada are high, and our domestic lumber industry can’t supply everything that we need,” says Robert Dietz, chief economist at the National Association of Home Builders.

In addition, “the wildfires in the West certainly haven’t helped [lumber production],” says Mike Theunissen, co-owner of Howling Hammer Builders, a custom home builder and remodeler based in Mt. Pleasant, Mich., and chairman of the building materials subcommittee at the NAHB.

Dietz says small homebuilders have had a harder time coping with the price hikes. “Larger builders are feeling less of an impact,” he says.

And optimism is on the rise more broadly. After reaching their peak last September, lumber prices began to fall, according to Monthly Composite Prices reports from industry tracker Random Lengths. “What we had was a shock to the supply system at the start of the pandemic, but now that lumber production has ramped back up, lumber prices have gone back down,” says Mark Rasmussen, a forest economist at Mason, Bruce & Girard, a natural-resources consulting firm, during an interview in early November. Yet just a few weeks later, prices were on the rise again, in response to both favorable building conditions in the fall and suppliers stockpiling materials for an expected busy construction year ahead.

Another bright spot for general contractors: “The remodeling business is busy right now, and you don’t need as many materials when remodeling” as you need to build a new home, Theunissen says.

However, with Americans spending a lot more time at home, many people are taking on home improvement projects themselves. As of mid-August, 61% of U.S. homeowners said they’d taken on a home improvement project since March 1, a NerdWallet survey found. Shawn Church, editor of Random Lengths, says the do-it-yourself remodeling boom contributed to rising lumber prices. “The strong DIY activity generated a demand for wood products that left supply and demand in an acute imbalance,” he says. “Wood products prices surged as a result.”

When lumber costs surged, Theunissen says, his company was forced to make some changes. “We started putting escalation clauses into our contracts for lumber,” he says. “For example, a contract might say that if lumber costs rise by more than 10% before our work is performed, then the customer must pay the difference... We hate to invoke escalation clauses, but there’s only so much we can absorb,” he adds. Howling Hammer’s contracts also started allowing for delays in materials delivery. “If it takes an extra four weeks to do a project because materials arrive later than we expected, then that’s just the way it is,” Theunissen says.

The Impact on New-Home Buyers

Of course, rising lumber prices also affect buyers purchasing new homes. Sales prices of new homes have risen sharply over the past year. As of mid-October, higher lumber prices had added $15,800 on average to the price of a new single-family home, Dietz says. According to Census Bureau data, the average sales price of new single-family houses sold in September 2020 was $403,900, up from $384,000 in January.

Homebuilders are grappling with a number of other challenges, Dietz says, most notably labor shortages and tighter mortgage lending requirements for home buyers and homeowners seeking home equity loans or lines of credit.

There’s little evidence that higher prices have kept large numbers of buyers away. Among affluent buyers, the demand for new construction remains high. Hans Wydler, an associate broker at Compass who works with buyers and builders of custom homes in the greater Washington, D.C., area, says, “Buyers [here] don’t care about lumber prices... That’s just not on their radar.”

Some buyers are being priced out, though. “I have a build job going on right now where the cost went up $50K due to the sudden increases in lumber and other building materials,” says Sheila Smith, an agent with RE/MAX Capital City in Boise, Idaho. “Boise is still being flooded with newcomers from bigger metropolitan areas, mostly California. They can afford the higher-priced homes, and our inventory is down 80% from 2019 overall.”

On a national level, housing starts hit a seasonally adjusted annual rate of 1.53 million last October, up 14.2% from October 2019, according to the Census Bureau. Moreover, homebuilder optimism in November hit its third straight record high, according to the NAHB/Wells Fargo Housing Market Index, which has been tracking homebuilder sentiment for 35 years.

Possible Solutions

Although future lumber prices can be difficult to predict, experts say a couple of actions may be able to curb lumber costs in the U.S. For one, “we need to find ways for the domestic lumber industry to produce more, perhaps through recruiting more workers or through new forest policy,” Dietz says.

Second, the U.S. government must negotiate a better lumber agreement with Canada to address the high lumber tariffs that are currently in place. “That’s been a longstanding issue,” says Dietz, “but I think it can happen sometime in the next two years.”

Lawrence Yun, NAR’s chief economist, sees reason for optimism. “Lumber prices should moderate and decline somewhat in 2021 as a result of more harvesting and a possible reduction in tariffs to foreign products,” he says. “That will help home building and generate local economic growth.”

 

By Daniel Bortz: Daniel is a freelance writer who specializes in writing about personal finance but also covers real estate, home improvement, travel, careers, small business, and even weddings.