5 Reasons to Build Now
New home prices are lower than they have been in the last 7-8 years. Most building materials have come down 10%-20% and tradesmen have reduced their prices in order to keep busy in a slower market. You can definitely get more house for the money then you could have back in the boom years.
Mortgage interest rates are at record low levels. In fact few people today can remember mortgage rates this low! Only recently, rates on a 30 year mortgage fell below 4%. If you financed a $500,000 mortgage with a 30 year loan in 2007 your payment would have been around $3,500 per month. Today, that same mortgage would be around $2,400 or about a third less expensive.
Decreased Profit Margins
A few home builders and developers have survived the great recession and are well poised to grow and prosper in 2013 and beyond. The marginal builders, the overextended, the inefficient and the reckless have been wiped away in the most difficult housing market in 75 years. The survivors made it by reducing overhead, eliminating waste and re-engineering their products so that value and affordability have been improved. The bottom line is that home buyers can expect more size and features for their hard earned dollars; and they can also expect homes less costly to heat, cool and maintain.
Inflation is on the horizon! In early January of 2012, we saw a 33% increase in sheetrock. This was the biggest increase in price for building materials in five years. Many builders are worried that other material suppliers may be watching closely and might increase their prices this year as well. The truth is that inflation has already hit the grocery stores and the gas station and that it won’t be long until it effects home building as well.
Increased Building Codes
On the surface it appears that new home prices have done nothing but go higher and higher since the 1980’s. The truth is however that much of the increase in new homes is the demand for better performing (more expensive) products like granite countertops, or stainless steel appliances to name a few. Likewise, the additional requirements demanded by new building codes have made homes safer, more energy efficient and more structurally sound. Enhanced building codes, more inspections and increased environmental regulations always result in better homes but unfortunately more expensive homes.