I am always shocked when people buy new cars! I have for a long time subscribed to the thought that owning a car is a privilege, not a rite. When you buy a new car, the value sips out faster than the air in a ripped sail, but people still purchase. It’s odd that many believe that houses have become the new car, but that is a bit of a stretch. In fact, just today a CNN report highlighted that here in Tacoma we may see values increase faster than any other spot in the nation. How does that make you feel? Yet, most of us may have likely done nothing due to the fear that has to be real or imagine over the nightly news or talk radio. In any event, owning a house is still one of the smartest financial moves you can make, but building one is still better. Why?
First, if you build with one of the few on your lot builders, keep the cost of construction down, and do a little sweat equity, you will be in a far better position to absorb any future downturn in the market. Right now land is at all-time lows, construction costs have remained level, and the labor pool although thin has the cream of the crop contractors. So, we thought we’d explore several reasons why people still build and hope to motivate you to jump-start your financial future with a new home.
There are several reasons, but let’s highlight just a few.
I own land already.
Many of our clients, some that we have worked with for over 2 years, either bought or inherited land. Is that your situation? Then is this the time to build for you?
Consider: Interest rates are now among the lowest in close to 50 years. An easy way to understand savings to you on interest rates is, for every change in the rate of at least a half a percent is 50 dollars on every 100,000 dollar loan. So, let’s say you wanted to borrow $200,000 and the current rate is 5.00%, your monthly payment is going to be +/- (based on bank fees closing cost) will be $1,000. But if the rate were to fall to 4.00%, you would knock $200 dollars off! As of this newsletter, 10.26.2010 the current rate is 4.23% on a thirty-year fix and a shocking 3.18% on a 5/1 arm. Some folks are afraid of arms, but when you build one of our homes, the equity can often be 50,70 or even as much as 100k, so if you feel in the future you need to lock a rate in normally your equity can take care of the closing cost. The difference in the arm over the fix is just so darn enticing!
My mobile/manufactured is falling apart
If you already own a mobile or manufactured home, and it’s getting older, why replace it with another mobile or manufactured home, when you could build a stick-built home on your property? You already have several advantages, one large one being that most of your site development has already been done, and so you will save quite a bit of cost there. Another advantage is that you likely already have some, perhaps even all, of your mortgage paid down, and since a stick-built home always sells for more than a mobile or manufactured home, your move-in equity on your new stick-built home will be substantial.
Click here to read about the advantages of a stick-framed home over a mobile or manufactured home.
My house burned down
We have had several clients come to us whose homes have burned down. In some cases, the home that burned down was not what they really wanted to be with, and so their insurance money gives them an opportunity to have a brand new home that they’ve always dreamed of. Or if you really loved the floor plan you had, we have a designer on staff that can draw that plan up for you (with your help of course). In this case, you get the same plan you loved before, but with new materials and updated to the most recent building codes. On occasion, we can even use part or all of the existing foundation, although it will need to be inspected to make sure the fire didn’t damage it.
I’m an investor hoping to cash in when the economy turns around
Perhaps you are an investor looking to seize the rare opportunity that has occurred with the recent, but no doubt short term, the downturn in the real estate market. In my 15 year history with home building, I have never seen land values come down until recently. Now, where I at one time saw a parcel selling for 80k, I often see land selling for half that and less.
Or, perhaps you want to take advantage of the tax foreclosure market where obtaining vacant land for around 5-10k is possible. The combination of obtaining loans from lenders for the average client has become increasingly difficult, so the rental market is red hot as a result. Will you cash in, build a townhouse, duplex, or a small home? Call or email to see what we are doing to make this possible.