Going back, a Roman calendar date

Source: John Burns Real Estate Consulting

To the best of their ability to model, here above is a snapshot of the challenge roadmap for anybody working through a hangover backlog, trying to clear it to get ready for a fresh pipeline of Spring Selling orders.

John Burns Real Estate Consulting principal Todd Tomalak notes:

We think material demand could grow by 20%+, even with starts growing 10%. Price hikes will add another 5%, increasing total single-family construction material demand 25%. This will be greater than the 10% increases in total residential spending dealers reported to us this year.”

The additional demand is the result of the extended time it takes to build a home, which is causing builders to install materials later in the cycle. This will vary a lot by material of course because the builders are also ordering some materials earlier than usual due to the shortages. To make things worse, dealers in our survey appear to be planning (and buying inventory) based on an expectation of far less growth than we expect they will see.”

Ultimately, it’s omicron and possibly a variant of Covid we haven’t yet all heard the name of that will determine whether this year’s Spring Selling Season will be all that it’s cracked up to be.

One way or another, the pressures of how those 30 days tick down to Feb. 18, and what they mean for builders’ capability – skilled people, the right materials, and flexible, patient capital, together with a highly-motivated but tolerant buyer – will weigh more heavily on smaller players in the community than those whose capital structures are built to withstand turbulence.

Fasten seatbelts. That red ink may mean something else come the outcomes of the next four to eight weeks.

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