The current supply chain shortage has now been impacting the real estate industry for months. Rising material prices alone are adding tens of thousands of dollars to the cost of a new home, but what other factors have arisen within these last few months? Join our free upcoming webinar on December 14th at 2 pm, “The Supply Chain Revisted” with our hosts Greg Stephens, Bill Garber, Jessica Lynch, and James Heaslet. These experts will examine how real estate professionals can navigate these supply chain issues and revisit some of the points made in their June webinar, “The Supply Chain Reaction.” 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 44 years. Starting with owning and managing a 5-office regional appraisal firm in Northern California from 1977 to 2001, then serving as a regional chief appraiser and managing compliance for a national AMC, then serving as a risk manager for a national lender, and finally 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. Have been teaching USPAP since 1995, am a certified AQB USPAP instructor since the AQB introduced the certification program in 2003, and since joining Metro-West, I have been receiving approval in various states to teach the 7-hour USPAP update courses to our staff appraisers and the staff of some of our clients. I most recently taught the new 2022-2023 USPAP update course for the Appraisal Institute.
My appraisal organization involvement includes Appraisal Institute membership where I hold the SRA and AI-RRS designations. I am also the past President of the North Texas Chapter of 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 in 2013.
Buzz: What is a supply chain shortage and how long has it been happening?
Greg: Metro-West actually conducted a webinar on this topic in June of this year and we are following up on that webinar on December 14th to provide our audience with an update on what the supply chain shortage looks like as we finish out 2021 and enter 2022. Within the real estate and the valuation industry, supply chain components impacted by shortages include housing – the construction of, the buying and selling of, and the financing of.
Supply chain includes literally thousands of interrelated components and processes, which we will be discussing in our Webinar on December 14th.
There are distinct supply chains involving residential and commercial construction; supply chains involve market supply and demand for the commodities produced by the home builders, local, state, and federal regulations impacting the supply chain process. Shortages occur when home builders are unable to obtain the necessary building materials needed 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, but what you do not hear about in the press are the minor components such as shortages of PVC, which 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 to complete kitchens.
Buzz: How has this supply chain shortage over the past six months impacted appraisers?
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. Over the past 6 months, this has been exacerbated by imports into the US being delayed at sea due to weather issue and delays at ports of entry where ships remain anchored offshore and are unable to dock and unload because of labor shortages and truck drivers.
It is also not restricted to residential construction. As populations shift into new areas, they require commercial support services, thus creating demand for more commercial/retail construction materials, much of it competing in the same markets with residential construction.
Buzz: What are the expected outcomes vs. the real outcomes we’re dealing with?
Greg: I believe it would be safe to say we are experiencing a new paradigm that started with the COVID-19 pandemic literally shutting down a world-wide global production chain never experienced in any of our lifetimes. No one expected the devastating effects of the global shutdown to last as long as it has, so I believe the expectations were much more optimistic than the reality outcomes.
As the nations, including the United States, began returning to more normal commerce, the ability of manufacturers, producers of the goods, have not been able to respond at an equal pace, thus creating shortages. This has been exacerbated by the labor shortages – massive layoffs and furloughs in many sectors of the market that began at the beginning of the pandemic in early 2020 and have not yet fully recovered.
Also, unforeseen but impacting multiple markets around the country is the shift in demographics resulting from work-at-home scenarios enabling employees to relocate out of urban environments into markets that were not predicted to experience such expansion. Another change in home design is to accommodate more conducive work at home environments for employees who previously occupied office buildings, especially couples who previously worked separately in urban office environments but are now working from home. Supply shortages in those markets include not only building materials, but also a shortage of local labor and support services.
Buzz: Why should appraisers attend your webinar?
Greg: Supply chain shortages impact the entire population, including appraisers. As previously mentioned, I believe we are experiencing a new paradigm that has resulted in changes to the way appraisers complete appraisals, inspect properties, and analyze economic supply & demand and market behavior. We have been experiencing a shortage of housing, which continues through Q4 of 2021 and is forecasted to continue into 2022. Appraisers should be accessing as many sources as possible to enable them to better understand the dynamics of the markets we appraise in and what the experts are forecasting to better prepare them for not only surviving but prospering in 2022 and beyond.
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 December 14th at 2 pm, “The Supply Chain Revisted” will receive useful information they will be able to use in the daily profession.