Source: Hannah Styles, News Staff
Build or buy?
That’s the question many future home owners are asking themselves.
With the price of building supplies, like lumber and steel, increasing more than 200% since April 2020, some people are choosing to buy their dream home instead of building it, but in today’s housing market that is easier said than done.
“The market for buyer’s is a definite challenge because of such low inventory. High construction costs have some people that were planning on building a home, now putting their plans on hold,” said Megan Cookston, of Yellow Rose Real Estate. “And vacant land that we’ve had listed for years is finally selling!”
Cookston is referring to land that does not have a home already built, but may or may not have a site ready to build on. In recent years, these lots have not sold at a high pace, some of which have taken more than five years to sell at a much lower price than sellers were hoping for. With vacant land beginning to sell, she is hoping that sellers will be able to get closer to asking price for this land.
Cookston also said that homes are also going under contract very quickly, and many buyers are looking at homes through virtual showings (video tours, video chats, and even 3-D home tours).
“Buyers can’t get here fast enough!”
Isaac Herrin, Realtor/Broker for Better Homes and Garden Real Estate Heritage, said that more people are looking to buy now more than ever.
“It’s really happening across the nation. From 2019 to 2020 we saw a sharp increase in buyers entering the home market, but today is unlike anything we’ve ever seen,” Herrin said.
Herrin attributes the seller’s market to historically low mortgage rates.
“When you look at a home loan for $225,000 just two years ago, it’s the same monthly payment you would pay on a $300,000 home today. As a result, people looking to sell their homes are getting absolute top-dollar for their property today,” he said.
As of publication, the average fixed mortgage rate was 3.08%, according to Market News Daily. In Nov. 2018, the average rate was over 5.00%. A two percent drop in rates can reduce monthly payments by over 25%, making more expensive homes more affordable to home seekers.
Although mortgage rates are at a record low, Herrin also agrees that it is not the only factor driving this market.
“There are several factors leading this market in the direction we’re seeing, but another issue we’re facing is as simple as the law of supply and demand. Everyone wants to move to the mountains right now, but we simply do not have enough homes on the market to sell. That funnel is causing prices to jump sky-high, just like gas did three weeks ago, and we only have so many homes we can sell,” he said.
As we move toward the summer season, Herrin believes this trend will continue.
“Over the pandemic, people saw they could do their jobs from home. So if you’re living in a big city paying thousands of dollars a month for a tiny one-bedroom apartment, why not move to the mountains and get a $400,000 home? I hear the same story almost every day,” he said.
It doesn’t seem like this market will change anytime soon, so if you’re thinking about selling your home, now is the time.