HBAR News & Events

The Cost Equation

Published: May 19, 2023

Lumber prices have come down, shouldn’t the cost of my new home?

Although material prices in many categories have improved, including lumber, the rising cost of labor sustains into 2023 as a low availability of trades is compounded by historically high demand. That is one of two primary cost drivers directly attributable to the development and construction process. The other cost driver is a limited inventory of buildable lots in the Richmond region that exacerbates the supply and demand imbalance.

According to the U.S. Department of Housing and Urban Development in an April 2023 report, “research finds a strong relationship between restrictive land use and zoning regulations and higher housing prices. Especially in areas with higher demand, local land use regulations can reduce housing supply elasticity, leading to fewer housing units built and higher prices.”

Vacant or redevelopable land must be approved for new residential construction by local elected officials, such as Board of Supervisors in the Richmond region’s counties. Local builders are selling in an average of 6.4 communities, which is 36% less than the average 10 years ago. The diminishing availability of buildable lots is applying upward pressure to the price of new homes in our area.

Think of it as a bidding war similar to resale homes. The fewer the number of resale homes in the market, the higher the premium on available listings. The same goes for lots purchased by builders.

If relief from the rising price of new construction homes is important to you, contact your local candidates for Board of Supervisor and express concern about the rising cost of new homes and limited supply inventory. Ask them to approve suitable development.

Primary Elections for local Board of Supervisors will take place June 20, 2023, in Chesterfield County, Henrico County, Hanover County, Goochland County, and New Kent County.

General Elections for Board of Supervisors in those counties will take place on November 7, 2023. Find your candidates by visiting https://www.vpap.org/.