Existing homes sales may be dropping, but new home sales are on the rise.

April 7, 2010

The Washington Post recently reported on yet another real estate story, announcing that the National Association of Realtors said the sales of previously owned homes dropped again in February, marking the third month in a row of “gloom” for those following the real estate market. However, it’s interesting that there was no mention of new home sales, and how many of these markets across the country are actually growing. It’s difficult to get the facts straight in today’s news sometimes. Statistics can be used to show off or report a particular scenario, but they don’t always portray the overall or complete picture correctly. Such is the case with the real estate market these days. Large companies are posting quarterly losses. However, while it is clear that some areas of the real estate market are struggling to recover, new home sales isn’t one of them—at least not in our area!

It is clear that people are seeing the long-term value in purchasing a new home versus a resale, which is part of why the new home market is doing well even in the earliest stages of the country’s economic recovery. Add in the fact that first time buyers will receive a Federal Tax Credit of $8,000 if they close by April 30 ($6,500 to move-up/repeat buyers) and purchasing a new home now actually makes financial sense. If built in the right location and with a builder whose reputation and expertise are valuable in the area, purchasing a new home will hold its value much better than a resale.

Choosing to buy a new home delivers distinct advantages: the buyer can add personal touches that reflect his/her style and taste all while keeping the resale value in mind for years down the road. Many areas are seeing growth in jobs, new home sales, and business construction, despite the fact that much of the media would like you to think otherwise. Do your homework. Investigate the opportunities in your area. You may be pleasantly surprised at your new found investment opportunities.

Stylecraft Builders

Stylecraft Builders – Central Texas’ New Home Builder

A Natural Disaster’s Trickle-Down Effect

March 17, 2010

In 2005, Hurricane Katrina became the costliest hurricane in the history of the United States and one of the most deadly. Not only did it immediately affect the lives of thousands of people in the Gulf of Mexico, but it also created a trickle-down effect in many industries worldwide, including the construction and new home building industry. Building materials became more scarce and, as a result, more expensive. With the recent devastating earthquakes in Haiti and Chile, we’re seeing a similar trend again. In the past six weeks alone, lumber for one average home has increased more than $1,200 and the price for sheetrock is expected to rise quickly by 20 percent or about $300 per house. Again, the natural tragedies are pushing demand for all commodities. Copper’s price is starting to experience a similar increase as well.

In addition to the demand created by the natural disasters overseas, the extension of the Federal Tax Credit for new home buyers, which expires April 30, has provided a boost to the construction industry. Since lumber mills had cut back their production when the recession curtailed building, mills don’t have the supply to meet the upsurge in demand. The mills can now increase pricing, with builders and, ultimately, buyers bearing the brunt.

We can’t predict natural disasters or what the government will do. But new home buyers can take control of their plans to build by being aggressive now, in order to secure the best pricing for materials.