Now is a good time to build or buy a home

I was asked by a reporter the other day why now is a good time to build a new home.  I started to ramble on but this is my list I came up with and thought it was a great idea to share in our next blog entry.

1.   Low Prices on Construction Labor

We 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.

2.  Historic Low Interest Rates

You can get 30 year fixed rates for in the 4% range.  Or many banks are offering ARM’s adjustable rate mortgages for under 4% that cannot go over 2% in five years.  So even if rates go crazy down the line your mortgage will not exceed 6% when you lock.  That’s crazy!

3.  Lot Prices have come down

It took awhile 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 burdern and reduce inventory.  It is a good time to buy dirt.

4.  Good Lot inventory will dry up

Now this may take awhile but with the lower prices on lots and the lack of new developments being created, good lots are going to be harder and harder to come by.  Meanwhile those new lots are not being created.  Even if they are you are looking at a year and a half before you could realisticly get a develpment off the ground.  At somepoint demand will outpace replacement of supply.  Then of course pricing starts to rise.  Economics 101.

5.  New Homes Are Better

Sure, I am biased but new homes are desired more by consumers that existing homes.  Why?  Easy.  

a.  New Homes are clean and don’t have stains, smells, and marks of previous residents

b.  New Homes are more energy efficient.  New codes and building techniques have helped.  We have our homes independently tested and audited by a third party to ensure their efficiency and even provide a written report with potential cost savings.  You won’t get that with existing homes.

c.  New Homes are easy to buy.  They have been inspected by the local municipality and although you may still want an inspection, you don’t have near the issues as you would find on an older home.  New homes are also far far easier to deal with than say a short sale or foreclosure.  

d.  New Homes have warranties.  Even if a builder does not include a warranty most products do carry extended warranties to the customer.  Not all warranties are transferable but having some protection there is well worth the additional cost of a new home.

6.  New Jobs to Wisconsin means more people looking for homes

Part of the “Wisconsin is Open For Business” is taking effect.  Already roughly 15,000 jobs have been added.  We have seen transferee activity this year for the first time in 2-3 years which is exciting to say the least.  As some of the changes and credits start to help the local business they will begin to hire once again and bring well paid talented people back to Wisconsin.  They of course will need new homes, many of which will choose to buy new.  Even if they don’t the people selling those homes will need a place to go.  

7.  Inflation is on the horizon

Materials have still gone up but 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.  

8.  The Best are left

With many building companies, contractors leaving the industry with the slow down only the best have survived.  Right now most builders are only working with their top quality crews.  This ensures you will get a well built home.  Even small things like Realtors have improved.  When the industry is doing well people flood in.  Good and bad.  Lately with the decline in agents we are dealing with only the premier people.  People who are in this industry during the good and the bad and really care about what they do and how they do their job.  It makes a difference let me tell you. 

9.  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 assesment letter 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.

10.  Still a useable investment

What eles can you buy and borrow against, live in, use everyday 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.

Now you have to realize that not every factor is going to be perfect when you decide to buy a new home but as you can see there are many positive reasons why now is a great time to buy a new home.

Let us know if Belman Homes can help you with that process.  


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Comments
3 Responses to “Now is a good time to build or buy a home”
  1. Nancy says:

    Good points. I just wrote a similar article on my blog.

    Your first point I didn’t discuss directly but maybe should have. I just tied it into new home pricing without explaining. I couldn’t agree more with points #5 and #10 as I think a lot of people forget about those “simple” things that make all the difference in the world.

    #8 is an interesting point I hadn’t given much thought to.

    #9 is an excellent point. The only problem with “trading up” for many in this market is that they are now, or have been for some time now, underwater with their mortgage. In many cases, this has caused people to fall behind on payment, face foreclosure, or even file for bankruptcy. Having good credit in this market is even more important than it was before the crash as lending practices have become a bit more stringent. That’s why I think “trading up” may be difficult for most people.

    I think first-time home buyers and people moving to a new area are the best fits for a new home today.

  2. Nancy says:

    Thanks for posting, it was a good read!

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