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12,612 Clark County Families Priced Out of Purchasing a Home due to Soaring Lumber Prices
The Building Industry Association of Clark County (BIA) reports new estimates of the number of Clark County residents priced out of purchasing a home.
The recent spike in softwood lumber prices has caused the price of an average new single-family home to increase by $16,148 since April 17, according to the National Association of Home Builders (NAHB)’s Standard Estimates of Lumber used to build the average home.
As of August 21, the price of framing lumber topped $800 per thousand board feet — a 130% increase since mid-April. Prices reported on April 17 showed the total cost to a builder for all the lumber and lumber-related products was $16,927. As of August 21, the same lumber costs for builders has risen to $30,470. This is a $13,543 (80%) increase in only four months.
The price of the home to the ultimate buyer has gone up by even somewhat more than this, due to factors such as interest on construction loans, brokers’ fees, and margins required to attract capital to residential construction and get construction loans underwritten. For items such as lumber that are purchased and used throughout the construction process, NAHB has estimated that the buyer’s price will increase by an additional 19.2%.
This comes at a time when Clark County is experiencing a housing shortage and a housing affordability crisis. The county is experiencing its lowest inventory level in the past three years, sitting at 1.6 months of inventory. With affordable homes ($250,000 to $300,000 price range) estimated to only have .5 months of inventory.
In July, the median price of a home was $384,400. A household income of $92,900 is required for an affordable monthly mortgage payment (less than 30% of total income). Clark County’s median household income is only $74,060. Based on a previous NAHB study, we know that for every additional $1,000 of added cost, 781 families are priced out of buying a home. That means that due to the inflation of lumber prices and the added $16,148 added to the cost of constructing of a new home, 12,612 families will be priced out of purchasing a new home.
“While we wish we could combat the lumber prices locally, we can remind elected officials and those involved in community planning to consider the unintended consequences of added regulations and increased fees; it all adds up. Whether it be building permits, impact fees, or other fees charged by local governments, all are reflected in the price of a home and can make them less affordable,” stated Executive Director Avaly Scarpelli.