Building a home is one of the most challenging and significant financial decisions you will make in life. Recently, different market conditions have caused many potential buyers to question whether this is the right time to invest in a new home. As a custom home builder, our opinion is that it’s hard to say if there’s ever the “right” time to build a new home. You will have to do what works best for you. We have, however, compiled some information we hope will help make your decision.
Custom Home Builder Tips: When to Build
What is Causing the Price Increases?
A storm of events and escalating market reactions occurred and can be traced to when the COVID-19 pandemic hit the country. Since then, different things have impacted the cost of raw materials.
Working from Home: As working from home became the solution to help prevent the spread of the virus, buyer demand jumped. Buyers saw the need for more office space at home and looked for houses with increased square footage, thus raising the price of raw materials.
Reduced Manufacturing: Manufacturers replenished inventory during winter when the demand was low. Then, COVID hit, and plants didn’t open to full capacity due to COVID restrictions and reduced demand. Then lack of laborers prevented them from returning to full production quickly.
Reduced Inventory: There is low inventory as most manufacturers aren’t operating at full capacity, and the demand is by far more than the supply driving up prices.
Foul Weather: In late February, the arctic freeze hit the mid-south, putting Oklahoma, Texas, and Louisiana into chaos. The cold temperatures and power interruptions caused the manufacturers to shut down operations, losing ground to capacity.
Will the Prices Continue to Rise?
No one knows what will happen after the pandemic. However, manufacturers and builders are forecasting a continued increase in cost as the country opens up. As a result, home prices will continue to rise this year but at a slower rate than last year.
The reason for the price increase is due to the available inventory for new homes to buyers. In addition, the unexpected rise in home sales during the pandemic made the already tight inventory conditions tighter.
Should I Build or Wait?
All the available current market conditions show that prices will rise until the end of this year. The pricing situation might change in the next few months or years. No one knows but what is known is that interest rates will continue to be at all-time lows, which increases buying power, helping make up for the increased cost.
The danger of waiting to build is that you might wait for too long to have the prices go down, and you end up paying higher building costs and interest rates. No one can predict what happens in a year or two from now. As a prudent buyer, consider your budget and whether you plan on staying in that home long enough to build enough equity to give you a profit during resale.
You can track the cost of new homes in the Raleigh area with Nubuildz. Using this search portal for custom home builders, you can see where homes are being built and their listing prices. Check us out today.