Adversity haunts the real estate market due to domestic material price trends.
Mar 15, 2022
Skyrocketing steel, lumber costs threaten to slow the real estate market
The events that hit the world population in 2020, and which promise not to stop in 2021, today seem to give a new blow to the real estate market. Steel prices have risen, which has triggered inflation rates, altering domestic material price trends, affecting buyers of new homes, whose structures are in American steel.
Manufacturers in different sectors appear to have struggled to meet market demands, and this is because steel mills remain reluctant to increase production, having stopped their productivity completely in the wake of the pandemic due to Covid-19. Despite the increase in requests from different consumer sectors for the metal in question, the steel mills are sustaining their position in a supposed economic recession.
We asked the opinion of him to the engineer Pablo Arce, CEO of Efficient Development Group, one of the emerging construction companies, which is giving more to talk about in Florida, and this is what he told us:
“Indeed, we are perceiving a significant increase in the prices of the steel parts that we use in our structures, and despite the fact that for months we have seen a notable recovery in various sectors, the stock of the factories seems to decrease. This is an inconvenience that all construction companies have had to face through different strategies, but if the market continues to have this kind of behavior, it is very certain that during 2021, real estate prices will continue to skyrocket. For the year 2021, we only have 20 units of the E-homes project, and to all buyers who acquire their new home before March 31, we will assure them, the 2020 price. After that, prices will rise and those who have not taken advantage of the offer will surely have to buy the remaining units, at higher prices, subject to conditions to the rises of the market”.
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In this specific case, the company works using 100% American steel, which puts managers at a crossroads, since the Joe Biden government does not seem to want to eliminate tariffs on steel from other countries, which helps to maintain the National steel prices skyrocketed, giving benefits only to steel mills that can raise their prices due to the high demand and low supply they maintain.
In this regard, the engineer Arce tells us: “Until now, many are the losers and few are the beneficiaries. On the one hand, the factories of metal parts produce very little or nothing, therefore the consumers of these parts, no longer get material to buy, and we are forced to support prices to keep our customers. And on the other hand, the steel mills increase the price of their shares, and our clients can still buy a house at the 2020 price”.
In conclusion, it seems that the viability of acting in the real estate sector only extends to the final buyer of houses that use steel, for completely solid structures resistant to different natural phenomena. The indicators say that we are experiencing a stage very similar to the same period in 2020, in which due to the pandemic, home prices fell, along with interest on mortgage loans. Everything seems to warn that the right time to buy a home is now!
