If you have been thinking about putting your house on the market in order to build your dream home, but you’ve been afraid to pull the trigger because of uncertainty in the housing market, you aren’t alone. Many would-be new home buyers, whether they want to expand their space for their families or they are looking to build something smaller for their new phase in life, have watched the market over the last two years in hopes that things would settle down.
With interest rates reaching their highest point in recent memory and a recession looming, we get it. But today, we are here to tell you the good news: you can stop waiting. Many factors that go into the decision to buy or build a new home look to be improving in 2023, so we wanted to go over a few of those here.
The increases in construction costs have slowed down.
Before the pandemic, the historical average increase for yearly building cost was under 2%. During the pandemic, average yearly construction costs increased by nearly 32%. One upside to the interest rate increases we’ve seen is that they have slowed the pace of the building cost increases, and fortunately overall construction costs are expected to increase at a normal pace – between 2% – 4% – in 2023.
The supply chain is on the upswing.
Another effect of the pandemic on homebuilding was the massive supply chain issues. Builders were waiting for months on end for materials and parts, thus making the process more lengthy. We’ve now reached a point where most building materials dealers agree that the supply chain is improving. Great news for homebuilders and potential home buyers.
Interest rates will most likely decline.
History has shown that interest rates fluctuate, and most buyers refinance at some point before their loans mature. Since rates increased at the fastest rate in over 40 years, history suggests that they will decrease again. We’ve already shared with you reasons why you shouldn’t wait for rates to again reach historic lows, but allow us to remind you that your mortgage today doesn’t have to be your mortgage forever. When those rates do again dip much lower, you can refinance and save yourself hundreds per month.
Your current home’s resale value should remain steady.
With the supply of homes still on the low end to meet demand, home values continue to remain intact. This is the opposite of what we saw during the 2008 housing crash, when there was oversupply and homeowners with interest rates they couldn’t afford.
The time to pursue your dream of building a new home is now. Let us help make 2023 your year. Contact us today.