Let’s face it, we are in a buyer’s market in Sequim and Port Angeles for existing homes and land, and most people know this. But something many people do not realize is that we are also in a a great market for building a new home. The cost of building a new home is lower than its been in years.
There are three major reasons the cost of building a new home is at such a low point right now:
1. The cost of building materials has dropped;
2. Land prices are lower; and
3. Subcontractors and General Contractors have lowered their profit margins.
Premier House Plans magazine cited new figures from the National Association of Home Builders:
Despite the gloom surrounding the housing landscape at the moment, there are appealing bright sides for saavy investors and homeowners who are considering construction of a new home from house plans.
First of all, the cost of key home construction materials has declined dramatically–and that rate of decline is slowing. As of the first quarter of 2008, framing lumber is 65% cheaper than it was two years ago, and 15% cheaper than a year ago. Drywall producers report a 36% decline in prices since last year, and a 5% decline since last quarter of 2007.
While sales of existing homes are down, sales of vacant lots are really down, and so if there ever was a buyer’s market for land, it is now. The inventory is high, and buyers are few and far between. While a developer is not likely to sell a lot for less than his own cost basis, he will shave profit to get some cash flow coming in the door. And with business so slow, of course, contractors are willing to shave profits to get business.
If there was ever a time to buy a lot and build a new home, that time is now. It’s been said that once a company shows up on the cover of Forbes magazine, the time to buy its stock and profit from its success is long past. By the time the guy on the street is talking about it, it’s too late. The same will be true of building your home. By the time everyone agrees that the market is going to recover, and the banking system is getting its equilibrium back, and the mortgage and real estate markets are getting their legs back, interest rates will already be on the rise and lot prices and construction prices will be back to normal. The opportunity is a small window in time, and that time is now.
[See Sequim and Port Angeles custom home builder Rick Anderson’s website with photos, house plans, and more.]
Last Updated on October 15, 2008 by Chuck Marunde
I think its a perfect time for a custom home, all of our suffolk va real estate listings are almost all custom homes.
I read your article, This is a Great Time to Build a Custom Home, and you’re right on! For the person who is looking for that steal of a foreclosure and they want to buy a place that might be run down or have problems, but they also want to get something at a discounted price (you get what you pay for even in this market), they’re not going to want to build the ideal dream home, but for anyone who is near retirement and has been planning to build their last home, this definitely is the time to buy a vacant lot and build a home. Interest rates and lumber prices are not likely to get much lower. If anything, interest rates will be going up pretty soon. Thanks for the article.
Good stuff and a lot of good information.
Very good article. I am facing many of these issues as well..