How to build during the most difficult time to build?

[Cameron Calvert]

Custom home builds have come to a screeching halt. The only new construction going on is in crammed subdivisions by the bigger builders who have more resources, labor, and most importantly, materials. Other new builds are sitting for 6 months waiting for a front door to come in before the house can close. That's how crunched all supply chains are right now. 

My lender tells me that land loans require 30%-35% down on a 10 year, 9% loan. After the land and construction loans are refinanced together, you're looking at 20%-30% down payment all in IF it's you're primary home. Builders are sitting tight and refusing bids. They're quoting projects with materials costs at 300% of current material prices and double the lead times for builds so that way they can cover their costs in case of continued raging inflation. In many cases, new construction homes do not appraise for what it cost to build them. 

Construction loan programs are on hold right now - What is the best way to position oneself before the supply chain breaks free and everyone is rushing to new construction? Do you buy land in hopes of being able to secure a custom build sometime in the near future at a reasonable cost?

[Nathan Grabau]

I realize this may not be the answer you are looking for, but I think there are safer bets to make than the supply chains getting better. Everything I have heard over the past few month, as a roofing contractor, is they are getting worse. We have gone from a few weeks to get material for a school sized roof to now being out 11 months. We are also being charged off of the delivery date pricing not the order date pricing. While I have only been in the industry for 5 years now, people who are 30+ year industry veterans are saying this is the worse they have seen it.

I think there are trends that people are not seeing to take advantage of, and it could be the darkest before the dawn moment, but it seems like there is no relief in sight for construction costs.