Time to Build

posted Oct 22, 2012, 12:15 PM by Keith Groninger
The housing market may be giving signs that it’s time to build again. Here in Winter Park, some homes have been selling for more than their asking prices. Granted, these have been localized events but they were brought on by a lack of appealing inventory.
 
Most of the distressed sale properties are undesirable and few new homes have been built recently. Since demand has been so low, the dwindling supply of nice homes has gone unnoticed, but indications are that this is about to change. Just a small increase in demand will create competition between buyers and cause an increase in prices for nice homes in desirable locations.

 
During the decline, potential buyers have been sitting on their wallets waiting for the bottom of the market. Additionally, nobody wants to purchase a home with the fear that in the future it might be worth less than they paid for it. It’s reasonable to assume that demand will increase as soon as buyers develop confidence in the stability of the market again.
 
Additional key indicators to watch are construction material costs and mortgage interest rates. Materials like lumber, concrete and drywall, are influenced by national and global pressures. Low demand has kept costs in check but these commodities with increase quickly with signs of a recovery.
 
While declining home prices have seldom been seen before, it’s well documented how the movement of interest rates affect buyers. Likewise when rates are declining, prudent buyers wait to see how low rates will go. On the other hand, when rates start to increase, a sense of urgency will motivate buyers to make a purchase.
 
Watch these three indicators to determine when it’s time to build:
  • High ratio of selling price compared to asking price
  • Construction material cost escalation
  • Increasing mortgage interest rates
 
Please contact Groninger Homes for free conceptual and preliminary estimating services. We have tools and information to help you determine the best time to buy.
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