New home building expectations for 2022

The housing market has exploded in 2021 as few would have expected. What’s on the horizon in 2022? Home prices are at record highs and many policy makers and industry professionals have begun to look to construction to ease shortages.

Of course, the construction industry has faced pressing challenges, including issues in global and domestic supply chains. This makes building new homes an ongoing challenge, even though there is demand to speed up the construction of new homes.

Things could improve in 2022, however. Although new home construction will remain heavily impacted by the effects of the COVID-19 pandemic, there is hope for improvement in the coming year.

Demand for new homes will remain high

Many buyers are hoping the housing market will cool down in 2022, and while experts don’t think it will be as competitive, that’s unlikely to be a drastic change – at least not one that prevents the market from dipping. to be seller-friendly. A few factors are driving demand for new homes, primarily remote working and millennial families.

Millennials in their late 20s to 40s are reaching an age where they can buy their first home. Several real estate experts have identified this as a key aspect of the housing boom, with no signs of dissipating in 2022. Some have even suggested that Gen Z, entering their twenties, is contributing to the surge in young people buying homes.

As thousands of buyers hit the market, remote work takes hold. Since many employers no longer require their employees to come into the office, people are starting to move based on their preferences. Those who previously worked in the cities and rented apartments are now buying houses in the suburbs because they don’t need to travel.

An estimated 12.3 million new households were formed in the United States between 2012 and 2021. During that time, only 7 million new homes were built. Thus, the construction of new homes was already lagging before the pandemic, which only made it all the more difficult to meet demand. In 2022, construction companies will have to work harder to catch up with an overwhelmed market.

The impact of workforce changes

In 2021, countless employers were observing a startling trend: what many professionals are dubbing the Great Resignation. Over the past year, more than 20 million Americans have quit their jobs, mostly in the lowest-paying industries.

If people quit their jobs, doesn’t that mean fewer people will be able to afford to buy or build houses? Not exactly. Since widespread quits mostly occur in industries that historically have low wages, people in those jobs were less likely to buy a home to begin with. In addition, many career changes are underway to access new opportunities that open financial doors for these workers.

It is important to note that labor mismatches have a large impact on the construction labor force. This is a big problem in the construction of new homes, especially since the sector was already experiencing a shortage of personnel before the pandemic. In 2022, demand for new homes will remain high while construction companies will likely continue to struggle to find skilled workers to build them.

The Great Resignation is not solely responsible for labor mismatches. The truth is, these are great times for many workers, as new jobs and economic growth open up new opportunities – it’s not about people sitting in the wings who can’t find work. And many workers are understandably hesitant to work in customer-facing environments as health risks persist. This, however, exacerbates employment problems in many industries.

There simply aren’t enough workers to build houses fast enough to meet the demand. As the shortage of new homes will therefore continue, prices should remain high. However, they are unlikely to increase as much as in 2021, which saw an average price increase of 18% in the United States.

Bid prices could start to drop

The supply chain crisis was arguably the biggest driver of construction setbacks over the past year. COVID-19 has made investors wary and workers scarce. Even with these challenges, however, construction companies are struggling to get the supplies they need even as demand for new projects returns.

However, things may improve again in 2022. Experts are optimistic that the shipping crisis may ease over the coming year. Some key indicators confirm this. Seaport congestion appears to be dissipating and container prices are slowly returning to pre-pandemic levels.

Materials like concrete and wood have been particularly difficult to acquire. The price of wood has risen 170% from pre-pandemic levels in 2021. Supply shortages are delaying the delivery of materials and making them less affordable.

Therefore, new home prices in 2022 will be directly affected by the recovery of these supply chains over the next year. If both can rebound to pre-pandemic levels, delays could ease for new home construction. This is especially evident with concrete, which is needed to pour the foundations of new homes.

A focus on sustainability

In 2022, the construction of new homes will see the rise of exciting new movements focused on sustainability. Architects, designers and construction leaders have all sought ways to meet the immense demand for housing in the face of today’s challenges. The result is surprisingly beneficial for the environment and consumers.

For example, cities are beginning to adopt materials recovery policies. These laws require that certain buildings be deconstructed rather than demolished so that valuable materials can be reused.

The recovered products are good for the environment and allow construction companies to avoid shortages in the supply chain, especially for wood. For example, the Georgia Institute of Technology’s Kendeda building was built in part using 25,000 linear feet of reclaimed lumber from film sets around Atlanta.

In addition to using valuable scrap materials, construction companies are exploring the frontiers of building technology. The world’s largest 3D printed neighborhood will open in Austin, Texas in 2022. 3D printed construction has been on the rise for several years now, but 2022 is about to be the year the technology takes off really.

Additive manufacturing is better for the environment than traditional construction, and it’s also faster. 3D printed construction minimizes material usage and creates less damage and waste than conventional methods. Austin homes can be built in days, with rooftop solar panels. That kind of speed could help meet growing housing demand if Austin’s 2022 project goes smoothly.

Optimism for buyers and builders

While the construction industry and the housing market still face challenges, recovery is on the horizon. Home prices and demand may remain high, but construction companies are starting to see relief in the supply chain. Sustainable building tactics may also contribute to supply and demand tension in the coming year. There is cause for optimism for hopeful homebuyers and dedicated construction crews despite ongoing issues.