All industries have been affected by the pandemic in 2020. Now that we’re into 2021, let’s take a look back at how 2020 impacted homeowners and the housing market specifically, plus how things are looking now that we’re starting fresh into the new year.
In addition to this blog recap, we’ve got a video for a supportive breakdown:
1. Increased lead times
The biggest delayed impact we’ve experienced as manufacturers has been increased lead times – hands down. And the reason goes back to the start of 2020, when we all realized we were facing a global pandemic and started scratching our heads about what this would do to the housing market.
The immediate response for manufacturers was to simply go home and reduce overhead costs by cutting down materials and labor. In our world, it was forecasted that our pipeline (and many other manufacturers’) would suffer as a result of homebuyer shortage.
Well, two things happened: our pipeline surprisingly skyrocketed, and the renovation sector bought up a vast majority of the simple commodity products (such as oriented strand board, or OSB) – product we always have in stock. The long process of getting the materials we needed for production by this time meant longer production times and increased lead times for getting houses out the door. At Rochester, we’ll continue to rely on our experts and strong supplier relationships to help us adapt successfully to this new environment.
2. Increased material prices
Given the immediate reaction to the pandemic and supply decrease, we faced a drastic increase in commodity material prices. And as a result, we had to start forecasting again… If materials were skyrocketing that much, how would this trickle down and affect the price of homes? And then, how would that impact homebuyers?
Between the lack of supply and the recovered incredible demand on the market, we had to hope that increased prices on commodities and slightly higher home prices would not deter homebuyers from investing in the market.
3. Incredible rate market
Despite the slightly higher home prices, there has been one saving grace: the incredible rate market we’re currently in. In fact, we saw the 30-year fixed mortgage rate sink to its lowest level on record just last month, given the latest data.
While we can’t predict anything at this point (we’ve learned from the last year that anything can happen), we’re hopeful that these interest rates will stay at new historic lows for the sake of homebuyers and the market as a whole. It could be what makes the homebuyer count stay fairly steady and even grow.
For more discussion on mortgage rates over the course of 2020, listen to the On The House podcast episode: Could Mortgage Rates Get Any Lower?
4. A housing shortage
At this point, we’ve made it through rising material costs, slow production time, and slightly higher home prices – but we’ve come out the other end with an amazing interest rate market… now what?
Over the last several months, housing studies have popped up everywhere, in hopes of staying on the pulse of the current and future housing market post-pandemic. Each study is showing one major commonality: a housing shortage.
Even in smaller towns, there just aren’t enough available homes for the amount of homebuyers trickling into the market. This is an ongoing issue that we hope will begin to change in 2021, and one that we hope to help alleviate with our business model and locations.
5. De-urbanization & emphasis on quality of life
Lastly, as a manufacturer in many rural cities across the midwestern U.S., we’ve seen the growing trend of de-urbanization. Now that people can successfully work off-site, in their homes, they’re starting to take control over the quality of their lives.
As a result, many potential homebuyers are looking to take their lives out of the city to raise their families, buy more affordable homes, and even retire.
What’s Rochester’s response to the market?
At Rochester, we’re able to offer de-urbanizing homebuyers an affordable, customizable option in their chosen rural areas and make their dream come true – even post-pandemic. In particular, we’re experiencing an uptick in business for a few reasons:
- Rural projects are easier because there’s more space
- There’s more privacy and property for a family to grow
- Our homes are built in a climate-controlled environment
- There’s more versatility and options for convenience and customization
- People don’t have to worry about working with a ton of contractors
- With us, weather isn’t an issue during the building process
- We combat the housing shortage with our ability to consistently build homes
- We can negotiate lots and prices and buy materials in bigger quantities
- We can buy better and more consistently, so our suppliers respect that relationship and supply us first
That’s what modular homebuilding brings to the table that a lot of site builders cannot compete with. We’re here to support you and the market through whatever 2021 holds.
We combined the art of housing with the science of manufacturing. Let’s work together to get you the home of your dreams.