Home Prices Falling and Building Costs Up What Do You Buy?
Tell Your Buyers the Obvious – Buy an Existing Home
There are periods, though not often, when home prices are falling nationally. More often it's a local event. Either way, real estate professionals could find themselves in a situation similar to the national market in 2008. Costs to build were up due to inflation, some of that caused by rising oil prices.
At the same time, home prices were falling almost across the board. The National Association of Realtors, and many of the members, like to advertise almost contiunally that "it is a great time to buy a home." That isn't what this is about. Many times, the decision of whether to buy a home or not is dictated by the situation of the buyer. We can help a prospective buyer in times of rising building costs and falling home prices simply by advising them to carefully consider buying an existing home.
New home builders may be offering incentives when their sales are down, but these are usually built into the cost up-front anyway. With their costs increasing, builders are forced into price cuts, but they frequently cannot compete with the prices home sellers are willing to take to get their homes sold.
The economics of the situation are such that a long term homeowner may have significantly more equity for discounting than the builder has in markup. It's not always true, but one of our values to buyers is in helping them to locate the value buys out there.