Is Now a Good Time to Build?
"Is now a good time to build?" A common question leading into this 'bottoming-out' period, and one that is often asked with a fair amount of skepticism given the uncertain climate of today's marketplace. As a whole we are plagued with 'bad info' stemming from and fostering more panic and even more uncertainty. The opening question is one provoked by indecision and as our story of economic despair becomes more sensational the facts become ever more skewed - a tabloid of misinformation. In the absence of trustworthy data it is hesitancy that has brought the wheels of industry to a grinding halt.
It is my responsibility to state the facts. Contrary to the national news feeds, local lenders are indeed lending and with the resurgence of bolstered FHA programs they are doing so with confidence. New legislation includes positive measures to both stabilize and stimulate the housing market.
First time home buyers - or buyers who have not owned a home during the past three years - can take advantage of $8,000 in tax rebates. The credits do not have to be repaid and there are no restrictions on use. First time home buyers and veterans alike can also enjoy 100% financing.
Interest rates remain historically low as the Fed is buying-up $500 billion in mortgage backed securities at the same time competition for new loans is becoming extremely competitive. Meanwhile FHA, VA and conventional loan limits have been temporarily increased as qualifying becomes easier for borrowers with lower credit scores.
For buyers interested in the resale market, beyond the obvious price advantages, the FHA is offering the 203k Program whereby the costs of renovations can be included in the loan amount - up to $35k. Those who want to stay put but still wish to take advantage of a buyers' market can refinance their existing homes for under 5%. Now is the time to remodel your living space or build that garage or master suite that you have been planning.
Legislation and Fed programs seem to be heading in a more positive direction but what about our Main Street economy? While the housing market is still several months away from an upturn we have seen many strong indications that the market is stabilizing. The housing inventory in surrounding areas has been declining. Days on the market for new listings seems to be shifting downward as the number of sales has experienced a slight up-tick. Conversely, pricing is beginning to stabilize. As I proclaimed last week, we are making our way out and when we do, industry experts seem to agree that it will be likened not to that of a trickle but to a dam breaking. Demand will rise and prices will skyrocket.
As it is material prices remain very low. Lumber, cellulose insulation, and drywall (to name a few) have seen dramatic declines while petroleum based products such as asphalt shingles continue to rise sharply in spite of lower fuel costs - foreshadowing things to come. Premium lots are still bought and sold at premium prices but land in general can be had for prices reflective of that of nearly a decade ago while builders and remodelers are readily available and offering their professional services at discounted rates.
Is now a good time to build? Consider the following:
- Time is of the essence - current buying conditions will not last and they are not likely to get an lower.
- Attractive pricing
- Low interest rates
- Build greener and better - cost of ownership has never been less as homes are being built much more efficiently
- Tax benefits
- Building wealth - with lower ownership costs the potential for equity increases dramatically
As a local business leader and president of the NVBIA Fauquier Chapter, I would like to hear from you. The industry as a whole depends on your input and continued support. Please use our contact form to send your questions, or write to "Ask a Builder" at P.O. box 294, Catlett, VA 20119.
The Northern Virginia Building Industry Association, a 72-year-old trade association, is committed to serving the housing industry within the following six Northern Virginia counties: Alexandria, Arlington, Fauquier, Fairfax, Loudoun and Prince William. On behalf of its members, NVBIA works to create an economic and political climate in which the building industry is able to effectively meet the demand for affordable, attractive, safe, well-planned and environmentally-sensitive residential and business communities.
NVBIA membership includes membership in HBAV: Home Builders Association of Virginia, which focuses on issues on the state level, and NAHB: National Association of Home Builders, which concentrates on Capitol Hill and other federal agencies.
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3409 Catlett Road, Catlett, Virginia 20119