As builders, we get asked this question a lot. Is now the right time to build a home? When you examine this question a little closer, what’s really being asked is, “In this economy, is now the right time to invest my money in a custom home?” The short answer to this question is “YES!”. When it comes to home-buying, however, no one wants the short answer! Let’s dive deeper into why “now” is the optimal time to build and purchase a custom home.
First, let’s start with the obvious financial scenarios. Usually people who are considering the purchase of a custom home have good financial “health”. Meaning, they either have money set aside for the purchase of their home, they’re comfortable with their financial status, and/or they have equity in their existing home. Let’s say you don’t fall into this scenario, though…like most people. Is now still a good time to investigate the purchase of a custom home? Absolutely! With the state of the economy, now might be the only time where you could afford the purchase of a custom home.
We’d hate to say “capitalize on a down economy”, but the fact of the matter is, it’s good for home buyers. Everything is available at discounted prices, including land. You may be able to find a nice piece of land at a dramatically reduced price because it is either bank-owned, up for auction, or simply because the landowner wants to liquidate their assets for cash.
Construction workers are willing to work at reduced prices because there’s simply not that much building going on…at least, comparatively to what we’ve seen in past years. The cost of materials, which makes up a large portion of the cost of your custom home, can also be considered at a reduced price, even if the material itself isn’t on “sale”. For example, the cost of oil has recently gone down, and with the reduction in the price of oil, we’re seeing lower “fuel surcharges” for the transportation of materials, as well as lower manufacturing costs for materials that are made with oil, like plastic.
Perhaps the biggest advantage of all is the fact that mortgage interest rates are lower than they’ve been in decades. You can get a 30-year fixed loan at an interest rate of 4.5% or lower! Let’s look at an example so you can see just how important this is. Let’s say you finance a $450,000 home. Your mortgage payment would be somewhere in the range of $2,280 per month. Now, imagine those mortgage rates are what they normally are (they bounce back up). If the interest rates go up to 6%, you’re now only able to finance a $380,000 home in order to have a $2,280 mortgage payment. You can get a lot more “home” for your “buck” in this economy.
There are also a plethora of tax incentives and credits being handed out by the government (local and federal) and your energy companies. These incentives can be for something like upgrading the equipment in your home to energy efficient appliances or building a green home. Incorporate these incentives into your custom home plans, and you’ve got more savings!
When the economy bounces back up, you can guarantee these benefits will change. Oil prices will go back up, cost of labor will go back up, mortgage rates will go back up, and ultimately the cost of building a custom home will go back up. Long story short…now is definitely a great time to invest in a custom home…for anyone!