Navigating a new home construction project in 2022.
Story by Tracy Dickinson
Featured in March/April 2022
Looking for a new home always presents challenges. Finding the right location and hoping for all those wish list items in one property are probably at the top of most lists. Add to the equation the seller’s market we’ve been experiencing over the past 18 months, and achieving that goal is even more difficult.
If you’re in the market for a new home, especially a custom home, those challenges are magnified by the supply chain complications currently facing every industry in the country.
But don’t lose heart. With planning, a good partnership, and a healthy supply of patience, that new home can still be yours.
If there’s one cardinal rule in the housing market these days, it’s that your plans must be fluid. Expecting the unexpected is key.
Kirk Mickelsen of KRM Development says, “A typical build used to be four to five months, but it’s five to six months now. You can only control what you can control. The other things, you just deal with as they come up.”
With the constantly changing demands and challenges in the construction industry over the past year or so, builders in the Des Moines metro have learned to adapt. The most important adjustment has been the understanding that schedules will change.
“Because of the unpredictability of materials and labor shortages, we implemented an ‘expectation letter’ to explain timeline and supply issues,” says Kalen Ludwig of Ground Breaker Homes. “Our typical timeline used to be about four and a half months. It’s now six to seven months, and we have to keep that fairly open-ended since we don’t know what the issues will be at any given time.”
From the product shortages at the grocery store to the delayed delivery of online orders, delays and supply chain issues have affected nearly every market in the U.S., not just the construction field. Recognizing the same will be true if you’re planning to build a home can help you adjust your plans and expectations accordingly, minimizing frustration down the road.
Find a good partner
Choosing the right builder has always been key to a successful project. You want a team that shares your vision of the finished home, that communicates well, and that approaches your project with the same passion and respect that you do.
That’s more true than ever right now.
With projects taking up to six months to complete and delays the norm instead of the exception, you want a builder who sees you as a partner and who can adjust to the hiccups that will inevitably occur.
“Having strong relationships with vendors and subcontractors has been crucial throughout the past 12 to 18 months,” says Ludwig. “Our past loyalty to our vendors and subs has been key.”
Long-term relationships and years of experience can often provide the calming voice in a stressful situation. Hubbell Homes’ Rick Tollakson says the current challenges are, for the most part, out of the builder’s control, but that’s no reason to get frustrated. “There are no easy solutions, but you can always find ways to adapt. For many of our vendors, being a large customer has helped Hubbell because they do their best to meet our orders.”
Long-standing companies have always taken that flexible approach, learning to adapt quickly to a rapidly changing market. Kevin Johnson of Accurate Development says, “As custom builders, every house we build is different. That can make it harder to get what we need and to get it on time. On the other hand, we’ve been able to stay on plan for the most part because our labor and supply needs have remained fairly consistent with our projections, and we could adjust our build schedules accordingly.”
Navigating this ever-changing market is difficult, but Destiny Homes’ Wade Hiner says that expertise is just one of the services a good builder offers. “Our job as builders and developers is to educate potential buyers on how the market is changing and how to work with those changes.”
For example, mortgage rates are expected to rise during 2022, but Hiner says that factor alone should not deter buyers. “Mortgage rates may creep up to 3.75 or 4.25 before the year is out, but that’s still incredibly low.” Compared to near-20% interest rates in the 1980s and over 6% in the early 2000s, interest rates in 2022 still have a negligible effect on monthly mortgage payments.
Even as the market continues to fluctuate, an experienced builder and a knowledgeable lending partner can help you find the right products, from financing to finished materials.
They say if you ask God for patience, He sends you circumstances that require it. This is that time.
As Kimberley Development’s Bill Kimberley says, “All the experts are indicating supply chain issues will continue at least the first half of 2022, if not longer. All the pieces relate—from labor shortages to supply chain issues to material costs. There’s no indication any of those will be changing any time soon.”
He says for builders, one of the most significant consequences is how those factors all affect project completion. “With nonstop supply chain issues, it’s taking two to three times longer to complete homes. Most builders have adapted as much as they can, and everyone’s anticipating it will just take longer to finish.”
Ludwig says, “The demand will still be there throughout 2022, but the lead times and labor shortages are going to make it harder and harder to build at the pace to match the demand. It’s going to be another busy year around the metro.”
Between delays on materials, a shortage of contractors to complete projects, and even delays on inspections as a result of overextended inspectors, if you’re in the market for a new home this year, it doesn’t have to be a pipe dream.
Plan ahead as much as possible. Work with the right partners throughout the process to help navigate the inevitable bumps in the road. And be prepared. You may have plenty of opportunities to practice patience. •
- Kevin Johnson Accurate Development
- Wade Hiner Destiny Homes
- Kalen Ludwig Ground Breaker Homes
- Rick Tollakson Hubbell Homes
- Bill Kimberley Kimberley Development
- Kirk Mickelsen KRM Development