Adnan Zai

There’s No Place Like (Trying to Afford a) Home

Adnan Zai
5 min readMay 6, 2021

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If you are trying to buy or build a house this year, you will pay an enormous price. The convergence of many factors including bark-eating beetles, Covid-19, and the aging of millennials has created a connection of events never seen before, and this has driven the price of lumber through the roof. This is the classic case of supply and demand, and for first time home buyers and the 55+ crowd especially, the lumber industry’s effect on the price of a new home is leaving many players on the sidelines.

What Home Buyers are Seeing

Home buyers are seeing outlandish numbers whether they are trying to buy a home or build one. There are several reasons for this hot housing market, and the market is definitely to the seller’s advantage.

First, the number of houses on the market has shifted dramatically, because the number of existing homes is so sparse. CNBC reports “About 1 in 4 homes for sale are now newly built, the highest share ever.” In a normal situation, about 1 in 10 houses that are sold are newly built. With so many new homes being built, the price of lumber is more important than ever.

Reuters recently reported the Commerce Department statistics that “The sales of newly constructed U.S. homes jumped by 20.7% last month to an annualized rate not seen since 2006, the zenith of the housing bubble.” Even though so many new homes are being built, they still cannot keep up with the demand.

The second reason for high prices is the cost of lumber. Fortune reported last week that, “The price per thousand board feet of lumber soared to an all-time high of $1,188, according to Random Lengths. Since the onset of the pandemic, lumber has shot up a whopping 232%.”

With these astronomical increases, new homes are an average of over $35,000 more expensive than they were last year, and this is putting a damper in the home-buying plans of many.

Besides low inventory of current homes and the high price of lumber, home buyers are facing rising costs of materials that go into new construction. Gypsum prices are on the rise, which is a key component in drywall, and copper and steel have also experienced hefty increases. Land itself is sparse, and therefore is being purchased at a premium.

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Adnan Zai

As an Advisor-In-Residence, Adnan particularly focuses on strategy, deal pipeline, and structuring.