Is now a good time to build a new home in Utah? That is a great question. As a builder I think it is always a great time to build. However will the facts back up my feelings?
1- Land prices have dropped in some cases by 50% or more. In the next few months there will be a glut of new lots put back on the market, the result will continue to keep prices down. I know of a classic subdivision in Herriman (The Cove at Herriman Springs) where in November 2006 ½ acre lots were selling for $220,000. Those same lots are now selling for $98,000. Lots in South Jordan that were selling for $225,000 can be purchased for just $125,000 now. I would say that now is a great time to purchase a lot to build on.
2- Currently, lumber prices are at their lowest in five years. In other words, a lumber package would cost the same today as it did in 2002. How many other products are the same today as they were in 2002? Not many.
3- In a slowing market, contractors are quick to call you back for a bid. Since there are fewer jobs to be had, you will get very competitive bids because contractors are hungry for work. This means that you will get better bids on building or remodeling from your contractor. Another thing that happens as the market slows the number of shoddy contractor’s decreases. When things are booming people flock to the construction trades hoping to make a quick dollar. In a tight market those that don’t excel will be forced out of the trades, leaving only the true professionals and those in it for the long haul to do the work.
4- Because the housing market has slowed down, consumers are in a position to take advantage of lower material prices, competitive subcontractor bids, and more equity when the home is finished. Now is the perfect time to build if you are looking to save money!
5- Home loans have great interest rates. The average 30 year fixed loan is hovering around 5% (I write this Jan 12th 2009). Most experts agree that while loans might drop to 4.5% as the market heat up the rates will rise above these historic 50 year lows. By now, most everyone is aware of the fluctuations of the housing market. Those fluctuations, however, have actually brought about an excellent opportunity to get about as low of an interest rate as is possible. Not only that, but lenders are looking for people with good credit to extend a loan to. Even better may be the fact that the government is cracking down on loan companies that are less than honest. This could help you get a better deal.
6- Since 1900, there have been six market panics. With the exception of the Depression, each recovered within 18 months. "History says that what falls hard and fast typically recovers hard and fast," The downturn in housing is now at 18 months.
According to Kelly Mathews Well Fargo bank economist “the number of building permits is less than half the number of households typically formed in Utah each year, leading Matthews to predict demand for new houses, spurred by falling prices and low mortgages rates, will pick up in the second half (of the year).”
If you are hoping to time the market. It would appear that now is the time. As demand for homes increase, the opportunity to pick them up at bargain pricing will decrease. In 5 years, you don’t want to be saying “I should have taken advantage of that once in a life time opportunity”.
So it appears that as Donald Trump says “If your plan is to “buy low, and sell high,” you’d better learn how to buy right now!”
Garn G Christensen Jr GRI is an Award Winning Builder and Principal Broker for Garn G Christensen Realty. You can take virtual tours of many of the homes he has built at: www.garnchristensen.com or you can contact him at garn@garnchristensen.
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