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02 Mar

Is a Strong Market the Right Time to Build Instead of Buy?

aerial view of new under construction homes in strong market

A variety of factors are driving the current housing market, but one of the biggest is low mortgage rates resulting in dwindling immediately available homes. With limited inventory remaining in both new construction and resale, homebuyers are turning to building their ideal home that better suits their family’s evolving needs.

Here are a few reasons why now is the perfect time to build a new home rather than settle for a resale or quick move-in home:

The National Existing Home Inventory is Shrinking

Right now, there are fewer homes for sale in the country, which means competition will be fiercer going into the spring buying season. January housing data shows the inventory of newly listed properties declined by 23.2% nationally and by 17.3% for large metros over the past year. Nationally, the typical home spent 76 days on the market in January, 10 days less than the same time last year.

What this means for homebuyers deciding between buying or building is that they should expect to pay more for existing homes right now. According to the same housing data, the median listing price in January was $346,000, up 15.4% compared to last year. Large metros saw an average price gain of 10.9% compared to last year.

Beyond rising prices and sellers slowly reentering the market, there’s another factor that makes building a home more attractive right now and that’s still historically low mortgage rates.

Low Mortgage Rates Are Bringing More Buyers into the Market

According to EyeOnHousing.org, low mortgage rates and the desire for space continue to convert prospective buyers into active buyers. Of the 15% of American adults considering a future home purchase in the final quarter of 2020, 56% have moved beyond planning and are actively trying to find one to buy, up from the comparable 43% share a year earlier.

Thanks to historically low-interest rates, more people can secure a low-rate mortgage and enter the market, further exacerbating the shrinking housing inventory and growing home prices.

The current environment of ultra-low interest rates and near-zero inventory is going to be here for the future, according to housing analyst and MarketNsight president John Hunt. As the rest of the economy finally begins to see improvement, rates will rise, but MarketNsight expects the 30-year fixed will stay at or below 4%. These factors continue to present opportunities to fill pent-up demand with new homes, provided homes can be put on the ground at the right price. If rates were to go above 4%, as they did in 2018, it could have a dampening effect on housing demand.

Homebuyers on the fence about buying or building a home right now should consider what the process of buying a standing home in the current market might look like. If bidding wars or settling at the higher end the budget does not sound appealing, consider building a pre-sale home.

More Options to Personalize with New Builds

Many Americans are still working from home with some companies transitioning workers back into the office in shifts while others are ditching in-office work for the foreseeable future completely in favor of telecommuting. If like most of the American workforce, you have found yourself thinking about your residence as both a place for both your family and business, you are not alone.

A pre-sale home allows for ultimate personalization to create flexible living spaces that accommodate your family’s needs, not to mention plenty of time to prepare to move. Whether it is a home office, virtual learning space, home gym, walk-out basement or media room, the options are endless. Determine your family’s particular needs to begin your new home search and take the time to pack and organize while your new home is built.

Top Atlanta home builder SR Homes is currently building in new homes throughout Forsyth, Fulton, Gwinnett and Oconee counties. Visit www.SRHomes.com/communities to learn more.

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