Lumber tariffs could affect local construction projects

Rising costs of lumber imported into the country could have an effect on home prices, especially in fast growing Hays County.

While such an impact wouldn’t be felt in Central Texas for several months or more, Buda real estate salesperson J.D. Sanford believes consistent increases over time could lead to instability in the housing market.

According to a June 2018 New York Times article, tariffs imposed on lumber imported from Canada to the United States, along with supply and demand, as well as ecological factors, have played a role in the rise of home costs in the country.

Sanford said a rise in wood cost would be an “unnatural or inorganic” way to increase the price of home values.

In the Central Texas area, for example, increasing population pressures have led to a rapid rise in home values over the past decade. In Hays County, the average market value for homes rose by 7.1 percent from 2017 to 2018, while commercial and industrial value rose by nearly 13 percent, according to the Hays County Central Appraisal District.

The cause of that increase in the overall value was due to the 2,600-plus new homes and 83 new commercial units built in the area.

However, an increase in material could, in turn, lead to a rise in the cost of building homes. That could lead to instability in the housing market, Sanford said.

Sanford said it could put people at risk if they buy a house at a higher value. If home values were to drop, it could take homeowners several years to build up enough equity before they can consider the ability to resell.

Conversely, Sanford said rising prices could lead to increased popularity in resale homes, as they could become more affordable.

“If new construction is happening, it would make resale homes not as attractive,” Sanford said. “But as home prices were to increase, resale homes could be bumped up because they are comparatively more affordable.”

Currently, Sanford said the commercial and home markets are “strong now,” but said it was “best not to tinker with it and let it be strong on its own.”

For Austin Habitat for Humanity, which helps to build homes for residents in the Central Texas area, keeping an eye on material prices is a critical task, said Billy Whipple, Austin Habitat vice president of construction.

Whipple said Habitat has seen growth in material costs since 2016, but it is “fortunate” to leverage partnerships with vendors and suppliers to ensure the non-profit organization doesn’t “take the full hit.”

Austin Habitat plans to construct 14 new homes by the end of 2018, with 20 to 25 new homes to be built in 2019, Whipple said.

“We’ve seen cost increase, but nothing too dramatically, but we’re keeping our eyes on it,” Whipple said. “I’m on the phone with suppliers to make sure that whatever happens, we are prepared for it.”

Locally, business and vendors haven’t been impacted by rising wood prices just yet. Curtis Dorsett, owner of Wild West Remodeling, said he hasn’t noticed a big difference in pricing, but has seen a slight increase in recent months.

Dorsett said he believes rising prices could affect larger construction and building companies.

“Prices go up and prices go down,” Dorsett said. “It’s the same ol’, same ol’.”

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