Lincoln County, Wyoming Archives

What’s it cost to build a house around here? (2022)

April 2, 2022 By Tayson Rockefeller Leave a Comment

I’ve always got to start with my typical disclosures. I’m obviously not a builder, but I work closely with builders and stay in touch with customers that have projects in the works. I always tend to have a few projects going on myself, as well.

I wrote an article back in 2015 with information about my experience with the cost of construction. As you probably already know, things have changed quite a bit since then. In addition, a good portion of my 2015 project was sweat equity. I later constructed another small home in 2017, and I should have updated this article then as I relied more heavily on subcontractors, though I acted as the general contractor in both circumstances. I later again acted as my own contractor during an extensive remodel of my 1980s home, and I am currently closely involved in a project with a general contractor.

Getting back to the nuts and bolts, the cost of construction has gone up pretty dramatically. Obviously there are a few things at play here including material costs, supply shortages on both materials and labor, not to mention the cost of living which has changed pretty significantly since 2015. This definitely trickles down to the cost of labor as well. To have some fun, I looked at some of the material costs from my previous projects. I decided to use 7/16 OSB or sheeting as my “gold standard”. That may not be totally accurate across the board for all lumber and materials, but it’s a good indication as to what’s going on.

7/16 OSB, 2015-2022
2015: $9.22
2017: $14.71
2021: $23.99*
2022: $60 +/-

Materials
To be fair, that 2021 price is… not fair. If you were watching, you might remember there was a lumber bubble that popped in the Fall of 2021, and we all thought that may be a tipping point on material costs. That assessment was incorrect, as things jumped right back up to a high point, and continued that trajectory. The interesting point was how much that drop in lumber prices could impact a typical 2000 square foot home. The answer (in rough numbers) was about $15,000. Obviously some great savings in that scenario, but it’s probably not going to make or break the bank in the scheme of a large (or even a small) project. When we look at all material costs, you can see where it all starts to add up. Virtually everything is in high demand and is experiencing some sort of shortage. Appliances, tile, drywall, copper, plumbing materials, whatever. When you add it all up, it’s pretty significant.

Labor
As mentioned, the cost of living and therefore the cost of labor trickles down to costs; and can have a pretty significant impact on them. If a concrete company’s cost of labor goes up 20% because the cost of living is up 20% (realistically more) the contractor can’t just absorb that cost. Here again, concrete, framing, roofing, mechanical/electrical/plumbing… the list goes on. The biggest contributor to the issues described?

Supply and Demand
Supply of rental homes is extremely low. Supply of existing homes for sale is low. Materials, labor, contractors, everything is in low supply. Demand? You guessed it, through the roof – pun intended. While the lack of supply has a direct impact on the cost of materials and labor, there are indirect costs as well. If I can sell my used car for 10% more than I paid new, I am absolutely going to do that. In addition, I think there is likely some price gouging going on out there. Regardless, the bottom line is that people in small communities make their living when the economy is doing well. I’m not just speaking for myself when I talk (or think) about slow times.

What gives?
It’s interesting to read articles about economic cycles and what seems to be a universal opinion that times are different in terms of a potential real estate recession. Supply is still extremely low today. However, while leading up to the recession in the mid-2000s, supply was out of whack. Regardless, I’ll never make a steadfast economic prediction – and I’ll never promise that a recession won’t happen. That said, I do believe that rising interest rates will create some affordability issues (who am I kidding, there are already pretty significant affordability issues) that will tamp down the demand for construction which is already expensive. I also believe that notwithstanding prices rising so quickly, I do believe the pandemic created some shelter, keeping things in control because costs increased so significantly. With these changes in our economy, we can only hope to see some relief to balance the market. If this occurs, it will undoubtedly help stabilize some of these crazy construction prices.

Okay, I’m done blabbing about the stuff you probably already know.

So what’s it cost?
I didn’t reread my article, but I recall building my first project pretty affordably, keeping in mind that I did so much of that work myself. Costs obviously went up in 2017, and I do remember it getting more difficult to line up contractors – there was quite a bit more construction happening then. A few other considerations, some builders calculate a basic garage in their square footage cost estimate and I think you could accomplish that with the numbers below assuming modest construction, keeping in mind that Teton Valley’s modest construction tends to be a little on the “higher end” side of things including better heating systems, insulation, etc. Most of the contractors here use 5/8 drywall, 12 gauge wiring, and so on.

The Numbers

2015: $250/SqFt
2017: $310/SqFt
2022: $420/SqFt

Roofs, Property Value and Peace of Mind

July 29, 2021 By Tayson Rockefeller Leave a Comment

A family friend reached out a few weeks back about the potential impact of a certain roofing system compared with another and how it might impact the value of their property down the line. It resonated with me as I am currently in the process of replacing the original roof on my 35-year-old home. My own experience has been somewhat tempestuous as we struggled with replacing an uncommon roof type and battling some significant damage we uncovered along the way. My home is an old family cabin that my wife and I have renovated over several years, and the old roof was an uncommon stone coated metal cold roof. We don’t have any plans to sell, so resale wasn’t on our minds. We wanted something that would blend in with the forest setting and perform well for a long period of time for the reasons mentioned above. Ultimately, we chose a very thick, shake-like asphalt shingle. We simplified the roof rakes and beefed up the Boston ridge to create a slightly more modern look, which we are happy with. In our case, we probably did increase the value of our home, and we are happy with the look of the new shingles even though we were concerned with it.

Anyway, when comparing the two roofing systems my friend was considering I didn’t feel one would significantly change the property’s value. In their case neither option would have been unusual for the home, but one was clearly more expensive. It was difficult for me to answer whether or not they would see a return on the investment for the more expensive roofing system. To answer the question, this is where I shifted focus to the overall picture. Sometimes certain home improvements, materials used or construction methods do not have a direct impact on a property’s value, but can when viewed in conjunction with the rest of the home and it’s finishes. I distinctly remember an incredible custom home of which the owner spared no change or effort throughout, but installed vinyl floors which was (honestly) just his preference. However, when helping him with the sale, it was a sticking point when comparing the finishes through the rest of the home on such a high dollar listing. Similarly, I remember walking through a property where the owner did some light renovations in anticipation of a sale. The fresh paint was great, but the Viking dishwasher felt odd to me. Yes, it was undoubtedly expensive and was certainly a talking point, but it didn’t fit well with the rest of the finishes and I don’t think that homeowner saw a return on that investment. The moral of the story, underdoing it and overdoing it are both bad, but in different ways.

Okay, if you’re still reading, on to the peace of mind part. I have probably written about this in other articles, but I wanted to touch on a few other considerations, particularly as we see new construction ticking up.

1) Snow slides. In my case, a metal roof was not an option. I have a wraparound deck that the snow would absolutely destroy in the event it were to slide off. My old roof never slid, and I hope my new roof never slides. In other cases, you want the snow to slide. Low roof pitches or shed roofs can be a good example.

2) Ventilate! I can’t think of very many circumstances where I would not recommend installing a ventilated or cold roof to help mitigate ice damming. This will usually include some form of screen or vent along the roof soffit and a vent in the gable ends or along the ridge of the home.

3) Ice Damming. Believe it or not, we get snow and ice up here. I believe code requires ice and water shield along the roof edges and valleys, but I usually suggest putting it everywhere, if you can. There are better ways to prevent ice damming as mentioned above in the ventilation section, but make sure you are protected in the areas mentioned and it never hurts to have the extra protection, particularly on roofs with a lower pitch.

4) Pitch. Speaking of pitch, be careful with this one. The modern, low sloping or flat roof systems are becoming more and more popular, but they can pose significant challenges when it comes to snow accumulation and ice damming. I’ll never forget all of the struggles I’ve had over the years with commercial building management where flat roofs with drain systems are common. The moral of that story, make sure you have heat tape in those drains, and monitor them closely. It doesn’t take long for these to plug up with ice creating a swimming pool on top of your roof.

As a final bit and disclosure, I’m a real estate agent, not a roofer. I have experience with some of these things, but am in no means an expert when it comes to the construction types and methods best for your situation. Always consult with your contractor and local roofer, and keep in mind our unique climate when it comes to architects. People tend to bring their local architect with them from dramatically different climates which can often lead to incompatibility with local contractors and issues with construction methods down the line.

Where are we relative to 2007?

November 1, 2018 By Tayson Rockefeller Leave a Comment

Being a real estate agent and a small-time real estate investor, not only do I closely watch localized trends, but also pay attention to National trends. I pay attention to articles about things that can impact the housing market, and I try to interpret how they will trickle down to my local market. Lately I have began seeing comparisons of home prices at the peak of our last boom compared to now, as an analytical point to understand where we are in our “expansion” cycle.

The general consensus of these articles is that we are on par with home prices in 2007. However, there are a couple of sticking points with this train of thought in my opinion.

First, this does not take inflation into account. While it has only been 10 years; with an average inflation rate of about 2.25% over the past 10 years, current prices are (arguably) about 21.75% higher than prices in 2007 according to the Bureau of Labor Statistics Consumer Price Index. I would interpret that to mean that a $100,000 home in 2007 would be $122,000 today not considering other Market factors, which these other analyses are also not considering. All things being equal, this should mean that prices are about 22% less today than they were in 2007, (assuming actual dollar amounts are similar) and that’s a big number.

Second, it does not consider difference in interest rates. Speaking in generalities, 30 year rates are about a full point less today than they were in 2007. While 1% doesn’t seem like much, if you take an average sales price of around $350,000, that can equate to $3,500 is a year in interest at the beginning stages of a loan. That’s almost $300 a month.

Third, if history repeats itself, that would indicate that we are about halfway through our expansion cycle, not at the end of the supply cycle. Based on local indicators, this would seemed accurate. Supply is still low, construction is underway. Usually the phase that follows expansion is high supply or oversupply. While construction costs seem to be keeping construction rates at bay, it wouldn’t be far-fetched to believe that things could pick up substantially and create an oversupply in two years’ time. if we aren’t careful.

In short, I truly believe that while we will experience a housing adjustment in the future, (not necessarily the near future) but also that it will not be as deep or have as much impact as the historic, most recent recession. I also believe that a recession will be followed by a period of expansion, and the thought process will repeat itself time and again as it has in the past. Until then, I’ll continue to read articles about National trends and take them with a grain of salt, then come to my own conclusions based on facts, data, historic data and my own experience despite how accurate or inaccurate they may be.

What is a Listing “Contingency”?

August 14, 2018 By Tayson Rockefeller Leave a Comment

Somewhat recently, the Teton MLS changed their display rules so that listings which are under contract (now labeled “Pending”, “Pending Contingent”, or “Pending Continue to Show”) still show up in consumer searches such as our websites and realtor.com. In years past, when an offer was accepted on a listing and the agent marked it as “pending” (meaning pending sale) in the local MLS, the listing was removed from advertising platforms so it was no longer visible to the public. Now that consumers are still able to see this information, I get all sorts of questions as to what the contingency is, or what it means. Most often, it is a potential buyer hoping that they can make an offer because there is a contingency and still have an opportunity to purchase the property. Unless there is a form of kick out clause, this usually is not the case. Further, most buyers depending on the language they are used to hearing and their local areas, believe that a contingency is something such as a buyer who must sell a home in another location before proceeding with the sale, but this usually isn’t the case.

Before going further, what is a contingency? Google’s definition is “a future event or circumstance that is possible but cannot be predicted with certainty.”

While I believe the above description is most accurate, I don’t believe it really fits with respect to the real estate definition of a contingency. Further, it is defined differently in different areas of the country, as mentioned above. Here in Teton Valley, it simply means any sort of event that must occur or must be satisfied by the buyer before the earnest money becomes non-refundable. For example, a buyer’s inspection is usually referred to as a contract contingency. Financing, a satisfactory appraisal – any number of things that must occur before the earnest money becomes non-refundable. Note that even if a contingency is not met, the buyer can still close a transaction if the buyer chooses to do so, effectively releasing the contingencies upon closing.

So, now that we have the local lingo down with respect to what a contingency is, it’s easier to remember not to get too excited about a listing because it is labeled as contingent. However, the way it is labeled can help indicate how solid the contract is. Currently, the Teton MLS has three forms of labeling a pending transaction. They are “Pending”, “Pending Contingent”, and “Pending Continue to Show”. In a perfect sense, simply stating “Pending” means there are no contingencies and it is very likely to close. “Pending Contingent” we covered above, and could simply mean the buyer has the right to do an inspection. “Pending Continue to Show”, on the other hand, might be something to ask your agent about. In order to label a listing as Pending Continue to Show, the buyer and seller are supposed to agree that the seller is authorized to do so. Also, there is usually a logical reason for displaying the listing like this, such as an unusual contingency like a buyer who much sell a property before closing on the subject property. In some cases these types of contracts are accompanied with a kick out clause in the event of seller receives a backup offer.

Now that you are armed with this new information, good luck on your search!

Recent Testimonials