New Home Market Is Beginning to Expand

With interest rates still low, land and construction costs on the rise, and new home plans, styles and features now available, many real estate experts believe it is the perfect time to build not only a new home, but your dream custom home. However, the question remains, “How long will all of these factors remain at such ‘buyer-friendly’ levels?”

For several years, new home construction methods and included details from homebuilders have made buying a new custom home both attractive and affordable. “Our commitment to quality has never changed,” said Tom Davis of Christopher Burton Luxury Homes. “We have been known as one of Brevard’s leading custom homebuilders for years and during the downturn we pursued quality as our first order of business. So many people had come to know us for the outstanding custom homes we built that staying true to who we are was vital. When so many others decided building a cheaper home was what buyers wanted, we took a different tact and decided to offer more at a better price.”

 

Signs of Recovery & Opportunity

As the economy is seeing new signs of life and a recovery seems to be well on its way, homebuilders are seeing more activity and more sales. With the old rule of supply and demand coming into play it means that inevitably home prices are beginning to increase with that new demand.

According to Charlie Pahulu of Arthur Rutenberg Homes in Melbourne, both material costs and labor costs are rising. “We have seen the hard costs of building materials and labor increase in the past several months. In January of this year, we saw drywall increase across the board by nearly 30 percent. The lumber commodity index also continues to climb, with this year’s increase being around 15 percent.”

In addition to building materials on the rise, so is the demand for quality labor, which is also in short supply. “The superior level of finish in our homes requires a special set of skills from our sub-contractors,” said Christopher Burton, president and owner of Christopher Burton Luxury Homes. “Costs across the board are up. We’ve tried to maintain pricing for years, but prices will have to go up at some point.”

Banking on the Inevitable

Interest rates and land costs are both expected to rise as well. Though the Fed has been outspoken in its commitment to holding rates at their current level, inflation and economic growth will at some point demand an increase. The existing inventory of building lots is also being exhausted as the increase in sales pace is on the rise.

Given the numerous benefits to building a new home in today’s economic climate and the inevitability that at some point prices will be forced to rise, it really could be just the right time to consider a new custom home. “When you take into account all of the benefits of a custom home that will be built to today’s new code requirements, coupled with the energy efficiencies reflecting lower cost to maintain, building ‘new’ seems like a brilliant idea,” extolled Burton. “When you consider our price is virtually the same as most older resale homes, it is certainly an option worth considering. Prices may never be better.”