THE BIGGEST BANG FOR YOUR BUCK
It is a great time to build a new home. The price of new construction hasn't been this low in many years and is down by 50% to 60% from 2005 levels. The cost of land has also gone down dramatically since 2005. Building new is affordable and can be a reality. The deals are there to buy new construction, but don’t wait as prices will creep up over the coming months. We are being notified by suppliers on a daily basis of price increases, from drywall to shingles everything seems to be going up. In addition, we have seen little to no reduction in soft costs such as permitting, impact fees, and other governmental fees and requirements.
I also think we have seen the lowest pricing on existing homes. Many areas are seeing an upward trend in pricing. Currently there aren't as many foreclosures on the market and the ones the banks do put on the market are being listed at much higher prices than they were a year or two ago. In many areas supply of existing homes in certain price ranges is very low. The simple concept of supply and demand applies; strong demand with low supply results in higher prices. The other consideration when buying existing is the amount of money you must invest to remodel, modernize, or clean up the home you are buying. Just remember the purchase price may be low but the house may not be move in ready requiring a remodeling process that takes time, energy, and MORE money.
The bottom line is it is a GREAT TIME TO BUY! Prices are low and I don't think they will get any lower. Interest rates are low and all the talk is they will only go higher. Fully investigate your options, do not assume that new construction will not be as big a bang for your buck as buying existing. Most importantly, DO NOT WAIT, if you do you may miss the opportunity of a lifetime.
Next time--Sources of funding and the appraisal process.
Marla Peters is a licensed Florida Certified Building Contractor and Florida Certified Public Accountant, she is Vice President of The Triad Group, Inc. a general contractor building in SW Florida since 1981.