It’s no secret that supply chain disruptions can hinder the home-building process. Many wonder if the issues are letting up now as the world returns to normalcy. What’s a realistic timeline for new builds? Valley Luxury Partners, an independent client-focused brokerage, services clients and families in Scottsdale and Paradise Valley—home to some of the most in-demand developments in the country. We’re here to give you the latest from an inner-industry perspective.
There is always room for luxury real estate.
As interest rates have increased and inflation has spiked this summer, some segments of the Arizona luxury market remain strong. Notably, Paradise Valley is currently the most “seller-friendly” market according to the Cromford Report, a widely subscribed real estate market report. This is largely due to a limited supply of resale properties and vacant land for development and continuing luxury demand that is less interest rate sensitive.
Home prices across the broader luxury market in Arizona are not expected to fall in the near future but price appreciation is slowing down—giving reason to invest and build now rather than later.
It’s important to keep in mind that the timeline to build a luxury home is greater than it was a few years ago. Across the nation, supply chain challenges and lack of labor have created a shortage of new homes being built. Federal data shows as many as 27 percent of projects to build new homes haven’t started.
How long does it usually take to build a luxury home?
Home size and complexity are key factors. In 2018, it was estimated that the process to build a custom home took about two years. That’s from start to end and includes design, obtaining a building permit and actual construction. Fast forward to 2022, and it’s highly likely that supply chain challenges and worker shortages will add time to the process. Anecdotally, we have heard from developers in the Valley that believe supply chain and labor constraints could add up to another year to the building process depending on the size and complexity of the project.
Building in Arizona requires additional expertise…
Building in the beautiful landscape of the Sonoran Desert can bring its own unique hurdles. It’s best to be aware of how the scorching heat, droughts, and, in Northern Arizona, potential wildfires can impact the construction process. Fortunately, top Arizona builders are familiar with these possible bumps in the road and can help you choose energy-efficient and water-saving features that can help your home withstand the environment. Additionally, in Paradise Valley, there are significant regulatory and permitting requirements if you are planning to build on a hillside lot, including public meetings and notification to neighbors regarding plans and materials.
In addition to working with a top builder, having an agent who is versed in new construction is paramount to success. Our founder, Robert Altshuler, has the unique advantage of over 20 years of expertise in guiding buyers and sellers through the entire real estate investment process in Arizona. Robert is a former real estate attorney who advised commercial real estate clients with hundreds of millions of dollars in portfolio assets and he actively participates in residential development as well as remodeling projects. In addition to his real estate experience, he worked as a wealth manager advising high net worth clients on all aspects of financial planning and investments.
How bad are the supply chain issues?
Without sugar-coating the situation, the shortage of materials is at a record high. The NAHB says the shortage is more widespread than at any other time since the association began tracking the issue in the 1990s and reports that 90 percent of builders have reported shortages. The shortages include everything from appliances, framing lumber and oriented strand board which is preferred in most home building. As the timeline for construction materials has grown, the time it takes to furnish your luxury home might take longer as well. Prepare for possible delays in shipments and construction of custom pieces. Some new homeowners are seeing it take up to a year for a high-end couch to make it to their door.
The supply chain hasn’t impacted demand yet…
Despite supply chain hiccups, demand for high-worth properties in Scottsdale and Paradise Valley in particular hasn’t wavered. Meaning, if you’re looking to build or buy in the area, it will still be competitive. Those with the expertise and know-how to navigate these waters will be the ones who come out on top. Valley Luxury Partners is an independent and client-focused brokerage that is committed to delivering the best possible real estate experience for our clients. Whether you’re looking to buy or sell, we’ve got you covered.