Reasons you should be purchasing your new home now!

1.  Housing Market is Stable again

Wisconsin has shown double digit gains in sales for 19 months straight per WRA statistics. Even the average sale price has been making small steady increases. https://www.wra.org/HSRJanuary2013/

2.  Lumber prices are climbing out of control.  

Prices on OSB have shot through the roof (literally) One look at this chart below shows you all you need to know.

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3.  Other construction prices are fast on the rise

2×4’s have risen sharply since last year, as well as drywall which has increased at roughly $900 per home.  Asphalt shingles as well as masonry have shown modest increases as well.  What this means is pricing on new construction is going up and even new spec homes are going to cost more that ones that are currently on the market.  Expect to see less price flexibility and discounts from builders.

4.  Interest rates have climbed

Believe it or not interest rates have jumped.  About 2 weeks ago they went up a 1/4 point, (no big deal right?)  but then followed up with more volatility the following week.  Our historic low interest rate is probably a thing of the past but the current rate is still incredible and this is more proof that they are not going to last.  Especially if you are looking to build you should be securing your home as soon as possible before the rates jump again.  If you were hoping to hit the rock bottom, sorry, you are already too late.

Data for this Date Range
Feb. 14, 2013 3.53%
Feb. 7, 2013 3.53%
Jan. 31, 2013 3.53%
Jan. 24, 2013 3.42%
Jan. 17, 2013 3.38%
Jan. 10, 2013 3.40%
Jan. 3, 2013 3.34%

5.  Lot availability has dwindled

Not to long ago we were discussing a over supply of lots.  To some extent that is true in fringe and undesirable areas.  However, the reverse is true in solid growing markets.  The majority of good inventory has been gobbled up by savvy home buyers and builders looking for good speculation buys.  This problem is only going to get worse and worse over time since it can take years to replace developments.  This is going to push lot costs back up as demand is far greater than supply.  Developers are still struggling with obtaining financing on projects so many viable options remain shelved.  Also municipalities are struggling with approvals as many have not worked on new development if excess of 5 years so everyone is starting over in that regard.  There already is a demand for new lots for sale in premier areas.

6. Trading up is still beneficial

You may not fetch top dollar for your existing home but if you are trading up to a larger home you are still buying a great prices and can offset your loss plus some.  The longer you wait, however, the less of a gap there is due to rising prices and interest rates.

7.  Construction labor

This is a scary topic for builders as well.  As we all know many very talented tradesmen left the industry during the housing decline.  Carpenters both rough and finish, masons, even electricians and plumbers.  These are types of individuals that you cannot replace quickly or easily.  They have a wealth of knowledge and certain physical skill set and passed down knowledge that you cannot easily replicate.  Added to that is that the majority of high school graduates do not have as much interest in the trades and want to jump into college looking for a cushy desk job after they graduate.  (even though they there is a nearly 50% unemployment rate for those individuals)  We as an industry need to do a better job identifying individuals who are good candidates for the trades and show them that it is a good, well paying, rewarding job.

If we cannot get good new tradesman, it is only going to push the labor costs up for the experienced, well qualified individuals.  They are also going to have to hire more inexperienced people and mentor them up.  I could less smaller framing crews and more, larger carpentry outfits with multiple crews and one head foreman to meet the expanding demand.

8.  Lower Cost of Ownership

New construction is 30 – 40% more efficient than existing homes per a CNNMoney article. Plus there is no replacement cost for many years that you will have on a existing home.  In the Midwest the average savings is $462 per home.  If you have a Focus on Energy Certified home you can save well over $1160 over a code built home.  In the same article the average roof replacement was $18,000 and the average furnace replacement was around $3000.

9.  New Construction commands higher premiums among buyers

The CNN Money article state new structures tend 10 – 15% more than a similar used home.

10. A 2012 poll by BDX reported the top 10 considerations for a new home.  The following were factors were listed by buyers in terms of importance, most of which lean towards new construction:

  • Quality of Construction
  • Safer neighborhood
  • Better floor plan
  • Lower maintenance costs
  • Architecture
  • Ability to Customize

11.  Lack of good inventory

The existing home market inventory has dropped dramatically in the past 4-6 months and many reports out there is that there is not enough good homes available for sale.  Add to that companies coming in and purchasing homes for rental usage and there is definitely a shortage in good listings.  Agents have shifted back to taking listings and soliciting for properties to add to their inventory.

Add all this up and you can see that now is a great time to purchase or build a new home!

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