Raleigh New Home Cost
The cost of a barrel of oil has been increasing steadily, particularly over the past few months. It's easy to see how this affects us in the short term - the ticker at the gas station clicks faster and faster, and the total gets higher.
But the cost of home construction, among other things, is starting to be affected by the rising price of a barrel of oil.
Diesel fuel costs roughly 70-80% more per gallon than it did at this time last year. As a builder, we're anticipating that, if the price of oil does not hold steady or decrease, that this could cause the price tag of a new home to increase by as much as 10-20% over the next 6 months.
Here are just a few of the ways that oil prices influence the cost of construction.
Fuel is needed for vehicles that:
Clear trees from a homesite.
Move dirt.
Clear a foundation.
Remove trees and take them to logging areas.
Ship lumber to lumberyards.
Ship building materials from factories to supply depots.
Ship materials from supply depots to job sites.
Run generators to power construction.
Carry subcontractors and employees to job sites.
Oil products or by products are used in the manufacture of:
Vinyl siding products
Windows
Paint
Shutters
Vinyl railings
We have also seen cost increases due to fuel expenses for:
Granite countertops (must be shipped from quarries worldwide)
Tile
Lumber
This is just a partial list.
Bottom line - prices of many if not all products are driven by the cost of oil.
We hope sincerely that the cost will not continue to rise, and that measures will be taken.
We believe in offering Energy Star homes, along with other options that will save energy and help protect the environment. Our employees carpool whenever possible, and we plan routes that save as much fuel as possible. We'll do whatever we can - but we can't control the cost of materials and fuel. If you're considering purchasing a new home, you may want to work with your builder to lock in the cost soon.
So the next time you see a story on the news about the rising price of a barrel of oil, remember that it's not just the bill at the gas station you need to think about - you may also need to wonder about the price tag on your next home.
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Articles copyright Stanton Homes 2006-2011. Unauthorized use is not permitted. Provided for informational purposes only, no claims are made by Stanton Homes regarding the validity of any statements. Please note: all listing information per MLS, and current as of posting date. Information subject to change. Stanton Homes does not make claims to ownership of any lot listings, but can work with homebuyers to purchase available lots and build. Home plans to be approved on an individual basis, subject to neighborhood restrictive covenants and lot restrictions. Ask for further information regarding any community, lot or floor plan. Photos represent typical homes and details of each neighborhood, to help highlight different options available in the Raleigh/Triangle area. No claim of ownership is made to homes or land pictured.
great post Penny. I think overall we will see prices increase because of the cost of oil. In the past we were telling clients that land, labor, and materials were the main factor in home construction cost. Now oil will play big roll in those cost.
Penny - This is all the more reason why buyers out there should get into a home soon rather than continue to wait for the market to drop because at the rate oil is increasing the market will inevitibly go up.
New home prices will have to go up dramatically to offset the added costs.
Good points Penny. The spiraling cost of oil will affect not only the price of new construction, but all commodities associated with real estate as well.
It will absolutely affect the costs of building materials, Penny. Someone has to absorb these astronomical costs for transportation. The question is, when will the piracy end, and who will be brought to justice because of the damages to the economy? America's being looted by the gas companies. We have to stop them.
Steve - Land and labor are still very important cost factors. The price of land, at least in our area, has not stopped increasing. But materials are going to become an even larger factor as well.
Judy - Anyone interested in purchasing a new home over the next year should be monitoring the price of a barrel of oil. That oil cost will affect the cost of the home.
Linda - If nothing changes, we are anticipating that the same home, built 6 months from now, will cost 10-20% more. Think about writing your congressman or representative and asking them to help us find ways to lower the cost of a barrel of oil and diesel fuel (which has nearly doubled in cost, while regular gasoline has gone up about $.60-.80 from this time last summer).
Michael - unfortunately the cost of oil affects just about everything. We need to look for ways to reduce dependence on oil - but we also need to tell our elected officials to help with this. Diesel fuel is a product that takes less to process than gasoline - and is actually a by-product of gasoline. Why has cost of diesel doubled? Almost all construction equipment runs on diesel, as do many shipping vehicles.
David - any ideas?
Great post, Penny! There are so many other items that we buy that are affected by the rising oil prices that we just don't consider. As consumers, we need to keep all these factors in mind.
Efficiency,efficiency,efficiency!!!!
In all aspects of your energy consumption.
I don't want to live in a "Blade Runner" world.
The next 4 months should be interesting wiht price pass alongs to consumers.
Tanya - Unfortunately the sticker shock at the gas station is only the beginning, and the affects of high oil prices will be felt on many levels. Lobby your local government!
Sabrina - efficiency certainly helps. Do you find your homebuyers are asking for Energy Star homes? What percentage of homes in your area are Energy Star qualified?