Lessons in Building: What We Learned in 2022
Last year was a learning experience for the building industry and everyone at Brand Vaughan Lumber. In fact, over the past several years we’ve seen ups and downs that proved challenging to navigate. But despite rising mortgage rates and supply shortages, we know there are opportunities (and smoother sailing) ahead. Pixabay
So as we start navigating 2023, let’s take a look at the most important lessons we learned in 2022. We talked with team members John Donkar and Steve Nolte about what they’ve seen and heard in the past year — and what builders, homeowners and the industry might look forward to in 2023.
The Impact of Interest Rates: Trends in Home Design
Climbing mortgage rates and a “35% to 45% growth in home prices since 2020” made it impossible for many potential homebuyers to make a purchase in 2022, according to the NAHB.
Steve Nolte and John Donkar both saw the impact of this on builders and installers. “Interest rates had a large impact on design trends,” says Steve, who has been in the sales industry for 27 years and with Brand Vaughan for 12. “Everyone pulled back on the sales side of the industry in 2022,” he explains.
However, Steve and John have seen a rise in build-to-rent projects. “We’ve seen the transition to more build-to-rent over the last four or five years, but there’s been a pronounced uptick in the past 12 months,” says John Donkar with Installed Services, who has been in the building industry for nearly 20 years.
This shift away from custom projects and single-family housing has influenced today’s home design trends. “Simplicity is becoming more popular because it keeps costs down,” says John. “Builders are seeing that they don’t have to offer so many options.”
This simplified design approach makes sense for builders and homeowners alike, and it’s a trend we expect to continue here in the Southeast and all over the United States. “Good design is not about spending the most money but offering well-designed homes, sometimes without bells and whistles,” says Mary Cook, a Chicago-based interior designer.
Even in custom builds, Brand Vaughn customers are “leaning toward simple designs and details,” says John. “It’s a building trend, but just as much as product availability impacts the decision as well.”
Shortages in Building Materials and Supplies
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Material shortages have eased with the exception of some products, according to the NAHB. “Lumber prices were just sky high,” says Steve. “But now, it’s approaching all-time lows. It’s an all-new frontier.”
In general, inflation and supply chain issues have a profound effect on consumer behavior and impact the prices of building materials across the board. But like lumber prices, Steve believes we’ll see things return closer to “normal”. “Pricing might need a reset,” he explains. “We’ll get back to a better, more stable market for both buyer and seller.”
The building market climate has been uncertain, but that hasn’t dampened our spirits at Brand Vaughan. “To quote Outkast, ‘You can plan a pretty picnic, but you can’t predict the weather,’” jokes John. “We’re eager to get back out and sell — eager to build new relationships with customers and strengthen our existing ones.”
Looking Ahead in Building
The powers that be (or the Federal Reserve) are expected to stop rate hikes at the end of the first quarter of 2023. “This should lead to sustainable declines for mortgage rates in the second half of 2023 and into 2024, enough to spur a rebound for single-family construction,” says the NAHB.
Here in the southeast United States, we expect to see all building projects ramp up again, along with a stronger job market. “All predictions are that we’ll have a healthy market for all of the above. The Southeast, in general, should rebound the quickest,” says Steve. “Builders in Atlanta are resetting for 2023 and beyond, and they’re pretty aggressive in laying the sales pipeline.”
It’s estimated that the housing market is underbuilt by 1.5 million homes, according to the NAHB. Despite so much unpredictability, there’s certainty that there’s plenty of work to be done.
Building Together: Advancing in the Year Ahead
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Brand Vaughan Lumber is proud to serve the Southeast homebuilding market and eager to get to work with others in the industry.
“Our customers know that Brand Vaughan dealt with similar problems in sales last year, and we’ve been trying to help our builders in a difficult market,” says John. But that mutual struggle has made all of us stronger and more successful. “Our goal has always been to help homeowners achieve that ‘American Dream’ of owning a home.”
Learn more about what Brand Vaughan learned this past year and about our predictions for 2023 in the industry. If you’re ready to get started on a project, feel free to stop in one of our locations to chat with our sales team or contact us online — we look forward to working with you!