Some of the biggest factors affecting the real estate industry are supply chain shortages – rising material prices are adding tens of thousands of dollars to the cost of a new home. Join our free upcoming webinar on July 13th at 2 pm, “The Supply Chain Reaction” with our hosts Greg Stephens, Bill Garber, Jessica Lynch, and Sehar Siddiqi. These experts will examine how real estate professionals can navigate these supply chain issues and offer suggestions on how to work together and improve conditions moving forward. We sat down with Greg Stephens, coordinator of this webinar with Metro-West Appraisal Company, to learn more about this free upcoming webinar. Can’t make that time for the webinar? Register to receive the recording directly in your inbox!
Buzz: Can we have your background in the industry?
Greg: My background in the appraisal industry spans a 44-year history, including owning and managing a 5-office regional appraisal firm in Northern California from 1977 to 2001, serving as a regional chief appraiser and managing compliance for a national AMC, serving as a risk manager for a national lender, and serving as the chief appraiser and chief compliance officer for a national appraisal firm – Metro-West Appraisal since September 2011.
Since 1987 I have been teaching appraisal-related courses through my seminar company, Appraisal Seminars. I have been teaching USPAP since 1995 and continue to teach our staff appraisers and the staff of some of our clients the 7 hour USPAP update courses.
My appraisal organization involvement includes Appraisal Institute membership where I hold the SRA and AI-RRS designations. I am past President of the North Texas Chapter, the National Association of Appraisers, where I hold the MNAA designation and am currently on the Board of Directors. I have also been actively involved with the Collateral Risk Network for over a decade and am a recipient of the Valuation Visionary Award.
Buzz: What is a supply chain shortage?
Greg: The best way to answer that question is to first look at the definition of supply chain – as a noun, it is the sequence of processes involved in the production and distribution of a commodity. Within the real estate and the valuation industry, commodities would be housing – the construction of, the buying and selling of, and the financing of.
Supply chain involves literally thousands of interrelated components and processes, which we will be discussing in our Webinar on July 13th.
There are distinct supply chains involving residential and commercial construction. Supply chains involving market supply and demand for the commodities produced by the home builders, local, state, and federal regulations impact the supply chain process. Shortages occur when home builders are unable to obtain the necessary building components to complete construction of single family and multi-family properties. We have been hearing reports of shortages and sky-rocket pricing of lumber for over a year. What you do not hear about are the minor components such as PVC which some builders are experiencing shortages of, and as a result, are unable to complete plumbing projects, electrical wiring, and most recently – paint. Builders are reporting construction delays because they can’t get the appliances.
Buzz: How are we experiencing one currently?
Greg: As noted in the answer to question 2, we have been experiencing supply chain shortages in residential housing construction for more than a year. This has impacted completion dates and has added to the construction costs which equates to additional costs passed onto potential home purchasers. We have been experiencing housing shortages in general for a much longer period of time, which some would equate to a supply chain component. Where demand is out-pacing supply, it creates a supply chain imbalance, which is more commonly referred to as market supply/demand imbalance.
It is also not restricted to residential construction. As populations shift into new areas, they require commercial support services. This creates demand for more commercial/retail construction materials, much of it competing in the same markets with the residential construction.
Buzz: What factors determine these shortages and how can we move past them?
Greg: : Unfortunately, there are no short-term solutions in the crystal ball, especially as we continue to recover from the most impactful world-wide event in modern history. Including some of the resulting by-products, such as demographic shifts in populations from urban centers to suburban and even rural markets, facilitating home design changes to accommodate more conducive work at home environments, especially couples who previously worked separately. Supply shortages in those markets include not only building materials, but also a shortage of local labor.
Buzz: Why should appraisers attend your webinar?
Greg: Two thoughts come to mind that preface my answer. The first thought is – I recall a motivational speaker years ago state, “Ignorance is not bliss….. It is poverty, and knowledge is power.” The second thought is a saying that was my brother’s high school senior class moto – “the higher you climb, the broader the view.” I could relate to that because I grew up on the western slope of Colorado where we could climb a tall mountain and literally see the world below us for over a hundred miles.
I equate the view to knowledge. The more knowledge we gain about our industry, about all of the various participants, what influences and what does not, the better prepared we are to understand the multitude of dynamic forces within the real estate markets, those involved in building, those involved in marketing, and buying and selling. The forces of supply and demand that have such a significant impact.
We have some exceptional panelists that will be sharing insightful information regarding what is going on within the housing construction industry, within the real estate markets as well as what is going on from a regulatory perspective that will have a possible impact on appraisers through the rest of 2021, into 2022 and beyond.
I have every confidence that as with our previous webinars, the participants who attend our July 13th webinar will receive useful information relating to supply chain dynamics within our markets.
We’d like to thank Greg for answering all of our questions and giving us the inside scoop on the free webinar. Make sure to register for “The Supply Chain Reaction” on July 13th at pm!