Elections can create an air of confusion and uncertainty. Who will be the next president? What will the next four years be like? Those are just two of the questions that float around people’s minds during long, drawn out election seasons.
While we can sit and theorize the answers to all of these questions and more, there is one thing that we, at WJH Engineering know will continue to remain a focus point: the housing market.
According to the National Association of House Builders, lumber prices have risen nearly160% since April of this year. This has been primarily due to high demand and a lack of domestic production. This has been adding an average of $16,000 to the cost of building a new house.
To counter increasing lumber prices, President Trump has been leaning towards opening up domestic harvest in our national forests and in the private forests. This is likely because in 2017, the President issued an import tariff on Canadian lumber coming into the United States, which then has led to an increase in the price of Canadian lumber for home builders. Being able to harvest domestically would allow for there to be less of a reason to import and lead to lowered costs.
President-Elect Biden, on the other hand, is expected to put more restrictions on our domestic harvest. He is also expected to be able to curate a more amicable relationship with Canada, which could lower the price of lumber being imported.
Regardless of the 2020 election results, the price of lumber is expected to remain around the same, as both methods will likely yield similar results.
Builder confidence has broken records, reaching 85 points in October on the National Association of Home Builders and Wells Fargo Housing Market Index. However, builder confidence could experience negative results with President-Elect Biden. There is a fear that President-Elect Biden will lead a rollback on President Trump’s deregulation efforts, and builders are pro-deregulation, favoring the current President’s efforts. With this potential rollback and reregulating from President-Elect Biden, costs would go up and slow down single-family home production.
Additionally, a 2016 study shows that government regulations occurring during development and construction accounted for nearly a quarter of the final price of a new single-family home, totaling to nearly $85,000.
With President-Elect Biden’s intention to reregulate, this cost of regulation is expected to rise.
As COVID-19 cases begin to increase in this new wave, local businesses (such as restaurants) will likely need to limit their occupancy and larger companies (such as airlines) will likely need to lay off employees. With COVID affecting both the profitability of businesses and the livelihood of those in the workforce, there is uncertainty in how restaurants will pay their landlords and how those potentially unemployed will continue to pay their mortgages.
A major factor in how this situation will change is in how the President-Elect will handle the COVID-19 crisis.
At WJH, we aren’t afraid of the unknown – in fact, we’re excited by the challenge and to witness first-hand what the residential housing market will evolve to be. We would love to know your thoughts or your opinions on what’s to come. Contact us today to further discuss and as always, if you need assistance in planning your next project.