(Annapolis, Maryland) Whenever someone has a big decision to make they typically turn to family, friends and of course the Internet for answers. Does building a new home qualify in the category of a “big decision?” You bet it does and in the real estate market of the past several years, the question of “WHEN” has become perhaps more prevalent than “IF”. If you have been in the market of building a new home in Maryland, you may just need affirmation that it’s finally the right time. However, if you have only recently entered into that market, you’re lucky, there will be much less negativity supporting your decision. There are many reasons to consider when building a new custom home in Maryland versus buying an existing Maryland home, however I will focus on a few simple key components of today’s housing market.
OPPORTUNITY
Opportunity is just one variable that always gets great consideration when the time to buy or build a new home question is asked. We have all heard unlimited stories of the buying opportunities in the purchase market today due to excess and available inventory. It’s simple, Economics 101 says, “where there is excess inventory a sale is certain to follow!” So with the high level of mortgage defaults, reduced equity due to falling home values and of course the economic challenges faced since the recession, there was certain to be a sell off and severe down turn in the real estate market. The questions everyone is asking are, “Is the real estate recession over?” and “Is now the right time to realize a great opportunity?” Of course there are still some great opportunities in the resale market, but how about new construction? If you look at new construction inventories as documented by the National Association of Home Builders, they are down substantially. Most builders have cleansed their operations of the spec homes that were caught on the books from the early downward spiral of the market. Many builders have restructured their debt and are only building on a pre-sale and as needed basis. This actually means some time in the future, perhaps sooner than later, there will be a significant demand for new homes. So how does this help the clients that want to build? It’s simple, land is more available and the price of land has adjusted where it makes sense to build a home once again. I would call this a time of great land opportunity. Building a new home and creating value starts with the land. If you do not over pay for the land or buy a building parcel with development challenges, you may actually create instant equity in this unprecedented market of difficult appraised values. As a Maryland home builder, NDI Homes of Maryland has seen a surprising surge in instant equity in the Maryland custom homes they have built for clients in Montgomery County, particularly Bethesda and Chevy Chase with some positive equity in Howard and Anne Arundel Counties as well.
COST
Another key motivating factor for any purchaser is always the cost. What is it going to cost me and is now the right time to buy so I am getting the best deal possible. For most people building a new home, especially a custom home, the timing to build is typically less prevalent than cost and need. Many of us would like to have a custom home, but if we do not need a custom home at this particular time, cost generally plays a bigger part. As someone with over 25 years in the business of New Construction and Construction finance, now is a great time to build specifically because of cost. Certainly we have had times where the cost to build was lower, however building costs volatility in recent years has been attributed more to rising energy costs, or an occasional worldwide crisis created by hurricanes, earthquakes, etc. that have increased demand for building material periodically. The only man made variable that has affected building costs is increased regulations of the IRC building codes. Other than that, we have been free from price increase because of reduced demand and low inflation. With that said, cost to build may have hit the bottom. Regulation will continue to be a burden for builders and certainly a low inventory of new homes will be a burden for the consumer moving forward, therefore allowing the market to “increase price!” The NAHB/ Housing and Economics forecasts New Construction for 2012 to increase 17% and another 46% in 2013. Good news for builders, bad news for “fence sitters!”
INTEREST RATES
Next, we cannot ignore “interest rates” and their effect on buying power. No doubt, the power to buy more with these mortgage rates is fantastic. Where will the market go? Can rates stay in the 3’s or even lower? Here’s the challenge with this part of the story, of course we don’t know and we do not have time to analyze all of the potential effects of interest rates in the future. Besides, you would likely fall asleep while reading the technical data involved in that explanation of the financial market and interest rates. So this is what I will give you on the trend of interest rates. Many forecasters are projecting rates to stay low, however they say we likely have hit the low and may not be there again. So why wait any longer and risk missing these very attractive rates altogether. It is proven that the wealthiest investors in the world almost never buy at the absolute bottom of the market. If they only bought at the bottom, the gamble would be too big and they are likely to miss more than they hit. However, the successful people historically buy when the market is on the way down to the lows and on the way up to the highs! This phenomenon has always proven successful knowing it is all cyclical as history has taught us. Our market today appears poised with these familiar indicators suggesting, it is time to get serious about buying or risk the reality that you may miss the market completely.
Finally, you may pick the right time to build and the right lot to build on, but if you do not choose the right builder you will certainly risk having a successful and rewarding custom home building experience. Building a new custom home is tough, and you should give yourself every opportunity to have a rewarding and successful home building experience. NDI Homes of Maryland has been one of the premiere custom homebuilders in Maryland for many years. With an extensive background in home building and finance, and a hands-on approach to site development, they continue to separate themselves as one of the true specialists in single lot construction and existing lot tear down market. So there you have it, it is the “perfect storm” creating the perfect building opportunity! Low cost to build, experienced and high quality building and labor professionals, unprecedented low interest rates, what are you waiting for? Although I may not have completely answered the question, “To build or not to build” I am confident that if you are a candidate to build, NOW is the TIME to BUILD! Good luck …
The founders of NDI Homes of Maryland had a vision for custom home building in and around Annapolis, Maryland and established a more “hands on” management and development approach to semi-custom home building in the Maryland real estate market. Our commitment to you is to continue to give you and your family the opportunity to have our company build the home of your dreams at the most competitive price. We always provide our customers with an excellent value and a well-constructed custom home built with pride!
