Some people clean up in economic downturns. That’s a given. Some of the greatest wealth in history found its roots in times of depression and recessions. Could you profit in this downturn by building a home?
At the time of this writing, the housing market has tumbled almost everywhere. There are bargains, foreclosures, and panic sales at times. Some markets are flooded with inventory like never before. How does that affect you as a potential home builder? Well, that depends on how well positioned you are to take advantage. There’s plenty of “Good”. A great deal of “Bad”. And even a little (or a lot) of “Ugly”.
- Land prices are low. If you don’t yet own a building parcel, you can pick one up for a small fraction of what the same parcel sold for just a couple years รับสร้างบ้านราชบุรี ago or so. No one is saying that the price is at the bottom, but in the long run, this is likely a good deal.
- Interest rates are at or near historical lows. Low interest rates mean the cost of borrowing money is very attractive. The less you spend on making interest payments the more money you can put into your home building project.
- Contractors are offering aggressive pricing. Builders of custom homes are looking for work … big time. You can get a quality builder for much less in some areas.
- Loans to purchase land are very difficult to find.
- You may be tempted to change your mind about building. Despite that opportunity to finally pursue that dream of building that perfect home, seeing the many deals out there can cause you to toss your plans and buy existing.
- You may be tempted to move ahead and build! Yes, abandoning your plans can be disappointing but so can building in the current market. Here’s why. You may find that despite the better deals you get, the value of the home you build does not exceed the cost of building it! For many, this will be a very big negative. That’s for you to decide.
- Construction loans are very hard to come by. Unless you’re in a strong cash and investment position, it can be very difficult to nail down a construction loan. As most know, the money supply is tight these days.
- Appraisals have fallen significantly. Lower appraisals mean the ability to get financing to build a home and build equity are hampered.
Those who have the cash and are basing their decisions on longer term approaches to their housing and investments can do extremely well. Others that are in need of significant financing without the ability to add cash will likely have to wait it out.
If you are not sure, see your local banker and find out their current policies. And don’t forget to check out your local credit unions. Some of them are in a better position than the banks. In other words, do your homework. You may find that this crisis is a great opportunity to pursue the dream of a lifetime.