The Current Status of Our Economy and Home Purchases
With the current status of our economy, there has never been a better time to buy. Interest rates just dropped again. Appraisers are very conservative on land prices keeping them at their lowest point in years. Bank credit may be tighter, but always remember that banks do not make money if they do not loan it. For those with the proper collateral, they will loan more than ever. If you are thinking about buying or building, now is clearly the time.
Even better, wood prices are at their lowest in decades. Log and timber frame manufacturers are temporarily experiencing slower sales. Some are sending office staff to job sites at no charge to help stack the logs for less. Nearly all are being very creative and flexible to satisfy homeowners. Lately, Custom Woodcraft Builders has been getting unbelievably aggressive prices – as much as half the norm.
Here in the Midwest, there have been some very unique challenges in timber framing with more than one closing their doors. Until they are re-established, Custom Woodcraft Builders has made wholesale price arrangements with a west coast mill housing a state of the art CNC machine for accurate fast turn around and free delivery to any job site in the USA. The blueprint design process can begin right away. NO ONE can deliver a quality timber frame for less and Custom Woodcraft Builders drawing/drafting rates are very aggressive.
Custom Woodcraft Builders has also arranged an extra 8% discount off wholesale on SIP panels for the next 90 days. Now is the time to make those dreams a reality. It is clearly a buyer’s market.
Still, instead of lumping all the housing trends together to create a panic, there is more to be gained by examining the facts of this correction as it relates specifically to the custom-home niche that log homes fit into.
Most of the foreclosures occurring today are happening at the lowest end of the market. Builders who created large tracts of production homes have seen their aggressive sales tactics to under-qualified first-time buyers backfire, leaving whole developments half empty. Luckily, these projects are mostly affecting pockets of real estate without devastating all of the surrounding areas or the higher end of the market. Most custom homes are in the upper range of value in areas that are generally more established with a mix of homeowners who are generally not first-time homebuyers.
The slowdown in construction starts mostly reflects these large-scale builders, who are now slowing down their production to fit the changing market. Meanwhile, custom-home building permits are remaining relatively steady, as they have for the last 20 years.
Custom-home buyers in the past have continued to build steadily, even through downturns such as those in the late ’80s and early ’90s. Several mitigating factors tend to keep log homes and other custom projects going up while the rest of the market sits on the sidelines.
First of all, most custom-home consumers are in it for the long haul. Log homes especially are the homes dreams are made of. Many consider their log home to be the last home they will have. This motivation allows consumers to look at their project within the context of long-term appreciation in real estate, which has performed well over any 10-year period since the Great Depression, regardless of interim slumps.
If you have been planning your project for several years and expect to move in and stay in the home long term, it’s unlikely you will want to derail your project from its current path as long as you can still afford to build. In many cases, the planning and permitting processes are more likely to dictate your timing for starting construction than temporary market conditions.
Custom Woodcraft Builders has found that in down markets, custom-home buyers have some financing advantages over ordinary homebuyers. Despite the difficulties in the credit markets, the larger portfolio banks are currently the prime sources for financing, while the rest of the lending institutions are struggling. These same banks have always been the best resource for log-home construction loans, particularly the one-time-close loan products that wrap in permanent financing with your construction loan. This type of loan can protect your project in a downward market since it doesn’t need an appraisal to roll to the permanent loan, eliminating financing concerns in a declining market. A knowledgeable mortgage broker, experienced in construction financing, can help you find the right bank product to bring your project to the finish line.
Additionally, downward-trending real estate markets are traditionally accompanied by lower interest rates. The Federal Reserve has already dropped the rates to keep the economy moving. These lower rates result in lower financing costs during construction and ultimately lower house payments for you in the long run. Another benefit of the declining values is that it creates justification for a lower-value assessment for your property when it’s complete. This results in lower property taxes, creating more monthly savings.
A slowdown in construction means that there is an abundance of labor and materials on the market today. After a decade of strong demand pushing up the costs of materials and making labor expensive and scarce, inventories are piling up, and many people in the construction industry are looking for work. Cost of construction is already declining in many regions. You can take advantage of this cost reduction to keep your budget in line with the values of the area, regardless of whether they are stable or declining. For additional details or questions regarding your project feel free to contact Custom Woodcraft Builders.
Custom Woodcraft Builders is a log home and timber frame construction general contractor and consultant. Custom Woodcraft Builders is specific for the log and timber frame industry. http://www.customwoodcraftbuilders.com/
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