Is Now a Good Time to Build Your Dream Home?
By Seymour Geiersbach
With the market the way it is, how can it possibly be a good time to build? In reality, there are nine great reasons for building now.
- Historic Low Interest Rates
Interest rates have never been lower, and probably will never get this low again in your lifetime. People are getting loans for under 3%! That’s crazy. It’s also a great reason to build a home.
- Low Prices on Construction Materials and Labor
Currently, lumber prices are at their lowest in five years. In other words, a lumber package would cost the same today as it did in 2002. How many other products are the same today as they were in 2002? Not many. We also have seen some of the lowest prices on the labor portion of new construction in over 10 years. Some of our best tradesmen are working for grocery money and to keep their crews busy. You can build the same house now for a lot less money than you will in the future.
- The Best are left
Another result of current conditions is a reduction in the number of shoddy contractors. When things are booming, people flock to the construction trades hoping to make a quick dollar. In a tight market, those same individuals are forced out of the trades, thus leaving the true professionals to pick up the slack. Right now most builders are only working with their top quality crews. This ensures you will get a well-built home.
- Inflation is on the horizon
Once the market gains more momentum prices will start to rise and rise quickly. Also as builder and contractors get busier they will start to reduce discounts and incentives or raise prices. Nobody wants to work for free forever. Suppliers & manufacturers have a keen eye for these changes and will start to adjust their pricing up. By building now you get the lowest prices using higher valued money. As that money continues to lose its value, you still pay the same amount on your mortgage.
- Lot Prices have come down
It took a while but lots prices have dropped significantly in 2011. Discounts have ranged from $10,000 to upwards of $50,000. Developers are looking to lighten their property tax burden and reduce inventory. It is a good time to buy dirt.
- Easy time to trade up
You may take a hit on the price of your existing home but if you are buying a larger or more expensive home you should get a bigger savings on the new purchase which will ease the financial blow that you might have lost on your existing home. Keep in mind your home may never have really been “worth” what that bank appraisal or that assessment letter said that you had in your file. Your home is worth what someone is willing to pay for it. If you didn’t have it for sale then then you don’t really know that it would have been worth that to begin with.
The challenge associated with building revolves around appraised values. When the housing market tightens up, banks scrutinize appraisals. This is a natural reaction to them safeguarding their investments. While it may be challenging to find an appraisal to justify your project, this could pay dividends in the future. For example, the appraised value of your home (before it has been completed) may be less than what it is actually worth. While this limits your construction budget, it means more equity when the home is finished.
- New Homes Are Energy Efficient
New Energy Star homes are less expensive to live in. These homes are at least 15% more energy efficient than homes built to the 2004 International Residential Code (IRC), and include additional energy-saving features that typically make them 20–30% more efficient than standard homes.
- Still a useable investment
What else can you buy and borrow against, live in, use every day and possibly still see growth in value? Nothing but a home. It amazes me how people can buy a new car and drive it off the lot and watch it lose 20% of the value in the first day. Now people are complaining because the home that they lived in, cooked in, used the bathroom in (gross but I need to make my point here) is only worth the same or slightly less or more than what they initially paid for it. Think about that! You would be thrilled if you bought a car, used it for two years and then sold it for the same price? Why isn’t it like that with a home? Deep thoughts here.
- It’s still the American Dream
A major reason our forefathers came to America was so they could own their own land and build their own homes. It took great sacrifices for them to have that dream, and now that dream is passed on to us. It’s a dream worth sacrificing for today as much as it was over two hundred years ago. Don’t let naysayers or the nightly news take away your American Dream. Take the first step – learn how to find the perfect builder. We offer a must-have guide for hiring a builder at https://www.geiersbachconstruction.comGet your guide now and build your dream home while interest rates, construction costs, and lots are low, and value and quality are high.
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