MARKET UPDATE: Why Today Is a Great Time to Build a Home
Here at Heartland Builders, we have had a lot of conversations with our prospective homeowners recently about the state of the housing market and financing for their homes. We thought it might be helpful to share our thoughts on the current state of things, based on our years in the business.
When Is The Right Time To Build A Home?
Experience has shown us that NOW is the right time to build. We have seen this to be true for the 25 years we have been in business. Through all of the ups and downs of the market and the economy, it is always best to build now.
More often than not, we hear from regretful prospects who have waited and then seen the price of the home they wanted increase significantly. Some of these people can no longer afford a new home. It breaks our hearts!
The old adage, “You can’t time the stock market; you need to get in it for the long haul”, goes for the housing market, too. You can’t time the housing market. If your family’s needs require you to build a home, then build the home. Don’t try and time it.
In the end, do what feels right for you, but understand that everyone we speak to – economists that specialize in the housing market, bankers, financial advisors – says that the market is not going back to where it was. Look at your individual situation and do what is best (and feasible) for you at this time.
What If Prices Drop In A Few Months?
Lumber will stabilize and is decreasing (yeah!) but we do not expect that pricing will decrease to where it was during early Covid. Pricing always increases, with little dips, unless there is a large recession – which no one is expecting. Signs are showing there may be a slow down but not a recession. Our process is front-loaded with a lot of pre-construction design work – we will adjust the price of your home to match the lower number pricing right before you go to the bank for financing.
When Will The Housing Market Cool Down?
Demand is still high for housing and housing materials, and we don’t expect that it will change. There are not enough homes being built (including apartments) for all of the households being formed. In addition, there is a constant demand for materials due to the remodeling of used homes, and natural disaster repairs (e.g. hurricanes and tornadoes). Not to mention the aftermath of the war in Ukraine which will ultimately result in a country needing to be rebuilt.
What About Interest Rates?
Interest rates have been historically low because of the recession and Covid. The government has been holding them low. Many people in the financial arena feel that rates belong in the 5% range and think that is where they will stabilize. Rates may go higher than that for a bit but will end up back in that range for the long term.
If you decide to wait for a lender to offer you a better deal than you’re able to find right now, you may be waiting for a while. The Federal Reserve has signaled that they intend to keep raising rates in an effort to stem the tides of rising inflation.
Also, even if you have to accept a rate you don’t like right now, you can always refinance at some point in the future!
The Bottom Line
Your life will go on whether the market changes or not. The longer you wait to buy (perhaps thinking prices will come down… they won’t!), the more likely it is that you will miss out on having better experiences in your new home. Don’t waste weeks, months, or years waiting for a different outcome.
Based on our years in the homebuilding business, we think there are many strong reasons to seize the opportunity and build your new home in Grand Rapids/West Michigan today! If you want to know more about how Heartland Builders can help you, get in touch today!