Is It Time To Buy A New Home

Dated: 07/25/2016

Views: 827

"Gains in both single and multifamily starts show that the overall market continues to move forward. As builders anticipate more consumer demand for housing, they should continue to add inventory. Single-family production has reached levels last seen before the Great Recession, an indicator that we are making gradual headway back to a normal housing market,” said NAHB Chief Economist David Crowe.

Housing and Interest Rate Forecasts 6/30/2016

2012201320142015201620172018
Housing Activity (000)  



Total Housing Starts7849281,0011,1081,1761,3101,414
 Single Family
5376206477137949161,042
  Multi-Family247308355395383394373
New Single Family Sales368430440502571675768
Existing Single-Family Home Sale4,1254,4754,3384,6274,8164,9234,965


Interest Rates
  Federal Funds Rate0.13%0.13%0.13%0.38%0.50%1.25%2.25%
  90 day T Bill Rate0.09%0.06%0.03%0.05%0.37%1.00%2.00%
Treasury Yields:
      One Year Maturity0.18%0.13%0.12%0.32%0.69%1.47%2.40%
      Ten Year Maturity1.80%2.35%2.54%2.14%1.97%2.67%3.47%
Freddie Mae Commitment Rates:
      Fixed Rate Mortgages3.66%3.98%4.17%3.85%3.75%4.39%5.16%
      ARMs2.69%2.88%3.02%2.94%2.95%3.62%4.42%
Prime Rate3.25%3.25%3.25%3.26%3.53%4.25%5.25%
Data are averages of seasonally adjusted quarterly data and may not match annual data 
published elsewhere.

             For more forecast details, visit www.HousingEconomics.com


So, when should you buy a new home?

  • Home no longer meets your housing needs today.                                                                                                                                           There's a need for downsizing. Or, the family is increasing, and a more spacious versatile floor plan is needed.  Almost one-third of American adults today are "doubled up," or living in the same household with another adult generation reported by U.S. Census Bureau. A new home allows the  buyer to personalize their dream home.  How exciting is it to choose your home's details, inside and out from the floor plan, colors, appliances, flooring, cabinetry, finishes, fixtures, etc. and to be the first to own the home. 

  • The cost of remodeling your home will outpace its resale value.                                                                                                                Remodeling can be quite expensive., and a larger home typically will be more expensive to remodel than a smaller home.

Remodeling ProJectNARI Remodelers’ cost estimate REALTORS®’ estimated cost recoveredCost Recouped    
New Bathroom Addition$ 50,000$26,00052.0%
Bathroom Renovation   26,000 15,00058.0%
Kitchen Upgrade   30.000 20,00072.8%
Complete Kitchen Renovation   60,000  40.00067%
New Master/Owner Suite 112,500 60,000               53.0%
Basement Conversion to Living Room   36,000 25,00069.0%
Attic Conversion to Living Room   65,000 40,00041.0%
New Fiber-Cement Siding   19,100               15,00079.0%
New Vinyl Siding   12,000 10,00083.0%
New Garage Door     2,300   2,00087.0
HVAC Replacement    7,000   5,00071.0%
New Wood Flooring
    5,500   5,00091.0%
Closet Renovation    3,500   2,00057.0%

                                            ** Remodeling Impact Report from NAR and the National Association of the Remodeling Industry.                                                                      

  • You want a home with changes that cannot be added to your current home.                                                                                             On average, a home built today has 700 more square feet of living space than one built 20 years ago. This means more windows, closet space, larger kitchens, and more bathrooms and spacious garages.

  • You like versatile floor plans with the latest technology.                                                                                                                                       Builders are offering versatile floor plans that suit the buyer's vision of lifestyle. For example, more and more homeowners work at home and a home office that's comfortable, convenient, and suitable for serious work is attractive for many families. New homes can accommodate advanced technologies liked structured wiring, sophisticated lighting plans and security systems, audio and entertainment technologies, remotely control your shades, automate schedules and configurations to save energy or set moods, SmartTV, programmable thermostats and heated floors

  • You want healthy energy efficiency living environment.                                                                                                                                       Never before have we placed more and more interest and attention to green products throughout the residential market. Homes now are at least 15% more energy efficient than homes built to the 2004 International Residential Code (IRC) and include additional energy-saving features that typically make them 20-30% more efficient than standard homes. 

  • Desire a home with less maintenance.                                                                                                                                                                               For routine maintenance expenses, 26% of all homeowners spent $100 or more a month on various upkeep costs. However, only 11 %   of owners of newly constructed homes spent this amount.

  • When your current home has zoning restrictions.  

  • Building lots are available in your neighborhood or a neighborhood you really like. 

  • When you are tired of commutes to work, to extended family, and to activity involvements.


Why does a buyer need a Real Estate Practitioner with a new home purchase?

New homes offer many products and amenities to the consumer. Buyers have so much choice with new construction and can be overwhelmed with the process.  When a home buyer enters into a new construction contract without an experienced real estate agent they subject themselves to “dual agency”. The fact that having buyers agent representation is FREE cannot be repeated often enough. Remember that  the onsite agent represents the builder/developer. There is a listing contract in place that specifies the agent’s duties and the commission paid by the builder. When an unrepresented buyer contracts a home, the commission agreed upon does not change, it simply reflects the listing broker (site agent) receiving both sides of the commission.

The onsite agent is legally bound to represent the best interests of the builder, not the home buyer. They are expected to work to secure the builder the best deal; not do anything illegal, of course, but they will not/can not negotiate against their client. The builder is their client, the buyer is their customer.


Special thanks to Cathy McDaniel: Author, Educator, Realtor for giving me permission to use the material in this blog.



 

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Cynthia Nichols

Cynthia Nichols entered the real estate industry full time in the year 2000 as a licensed real estate salesperson in the state of Georgia. Cynthia grew up in the Greenville area and entered real estat....

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