Have you ever wondered why does the cost of a new home seem so steep?
With the material and labor costs increasing, home development prices are on the rise too. There are plenty of hidden costs in the price of building a home that most buyers don’t think about. Each section of your house can take multiple hands to fully construct from framing, plumbing, cabinets and countertops, to gas and heat and don’t forget about the tile, grout, and wood finishing too! All these tasks require special traits of multiple craftsmen who need to cover their overheads. There are 3 rising materials and labor costs to a new home development that most home buyers do not take in to consideration when buying (see below).
Materials and labor cost increases:
- Increase Cost of Quality Wood – Lumber prices are up to there highest prices since 1996. The surge in lumber prices is caused by the high demand of quality wood due to the U.S. housing market getting back on its feet, Canada’s beetle infestation and of course China’s continually high demand for lumber.
- Increase in Construction Cost – There are plenty of hidden costs that most buyers do not think of when purchasing a new home. From the excavation of land to filling the foundation and a new homes most expensive cost, framing and trusses. Plumbing and electrical expenses add up real fast covering over 10% of costs to build a new home. Construction permits and fees pay a steep hidden fee that most buyers never see as well.
- Increase in labor wages – In today’s world with the forever increasing cost of living, construction laborers wages are increasing as well to meet with societies demands. Labor wages take up 25% of set cost to building a new home and the average construction laborer is paid just under twenty dollars an hour.
From lumber prices skyrocketing and laborer wages quickly following home development prices are back on the rise. There are multiple craftsmen that work on each specific area in a new development costing roughly $100 per square foot in a new housing development. The cost of new homes now seems more reasonable and fair after realizing how many hidden costs are factored in to the final total.