A client of Nashville real estate agent Danielle Beasley was supposed to close on their home recently, but because of a shortage of garage doors available to order and deliver, their house was incomplete. Due to codes, the client could not move into their new home until the garage doors were delivered and installed.
That house sat unoccupied an additional month waiting for the garage doors.
Throughout the United States, people are seeing a shortage of construction materials from lumber to windows, resulting in projects being halted or increasing the price of the build. The influx of people moving to Nashville is also increasing the shortage of inventory for real estate agents in Nashville like Beasley.
This shortage of inventory has resulted in Beasley selling homes with leaseback opportunities. Leaseback, short for “sale-and-leaseback,” is a financial transaction in which one sells an asset and leases it back for the long term; therefore, one continues to be able to use the asset but no longer owns it. These help ensure that the seller does not sell their house and then have trouble buying another home.
“They are scared to death to put their house up for sale and sell it and not have somewhere to go,” said Beasley.
Custom home builders like Bryan Edwards, president of Hughes-Edwards Builders, Hendersonville, are also affected by the shortage, as it makes projects more expensive or postponed. Edwards says one of his projects was stopped because within a month, the lumber package price went up $60,000.
“It’s harder to make our margins when everything is so inflated,” he said.
This shortage began early into 2020 before the COVID-19 pandemic, and while COVID-19 may not have caused the shortage, it has made it more difficult to get supplies while the demand continues to remain high.
“COVID just amplified it,” Beasley said.
The pandemic also resulted in a national eviction moratorium being ordered, prohibiting landlords from evicting tenants from their homes if they have not been able to make rent payments. With the moratorium’s extension ending on June 30, Edwards is hopeful it will help with the housing and inventory shortage.
“I think it’s going to be a flood of opportunities there, or they will be more inventory on the market,” Edwards said.
This February, the Texas ice storm added to the shortage of construction supplies with the shutdown of the Sherwin Williams plant, making certain paint colors in short supply.
As a result, Edwards said they have had to order materials much earlier in order to ensure that they arrive on time. But even then, they still experience delays in materials.
“They can give you a delivery date, and usually they are a month behind that delivery date,” he said.
For lumber specifically, the demand is so high that many lumber mills have little to no supply to distribute.
“(Lumber mills) used to have rows and rows and stacks and stacks of lumber, and now their warehouses are empty because as soon as they cut it, plane it and produce it, it’s gone,” Edwards said.
What blew Edwards’ mind was the shortage of appliances for his clients’ homes.
“We had a client that wanted just a standard Bosch dishwasher, which is a pretty standard project. This was back in, I want to say April, and they were telling me that it would be September or October before I would see that dishwasher,” Edwards said. “So, we made a choice to go elsewhere.”
Edwards said he is trying to advise his clients if their project budget will be a stretch, to have a nest egg of money with materials being more expensive due to the shortage.
“We want to make sure that they have enough money in case things happen so we are not stuck,” he said.
So, when will this end? When will people begin to see the supply return to what it was? Both Beasley and Edwards said that this shortage will continue to impact them this year and possibly the next.
“Until you see major cancellations to which people are just not buying, they are going to keep the prices where they are,” Edwards said.