Jan 12, 2012 Custom Home Design

Without a Doubt

What do stock market forecasts, economic predictions and weather projections have in common? They all have too many variables to forecast the future accurately. The same might be said of the homebuilding industry. So if you want to know if this is the right time to build your new home, what should you do?

Consulting a ‘Magic 8 Ball’ could be one strategy. Do you remember that shiny black orb from Mattel? First you would ask it a question and then turn it upside down. Soon one of the random answers would magically appear; such as: “Cannot predict now” and “Reply hazy, try again”.  We know that’s not the solution, but it’s certainly lots of fun!

To plan for the future, put aside that magic ball and look at history and current trends. Then ‘test the numbers’ against your past experience and use common sense. To make it easy for you, we’ve sifted through the experts’ data and listed all the important measurements. You can find out how these key metrics are doing at the end of this article. We predict everyone will reach the same conclusion.

When the right amount of variables point in the same direction, it’s easy to form a clear picture of what’s to come. In fact, more and more people intuitively know it without doing any research. Prices will not go lower and interest rates will not go lower. Right now, the timing will never be better. Without a doubt, NOW is the time to build a new home!

  • The Federal Reserve just published that “national economic activity expanded at a modest to moderate pace during the reporting period.”
  • Household growth has picked up, and all measures of inventory (new & used) are down meaningfully. The supply-demand environment is quite different than in the past four years.
  • Investors are responding to attractive opportunities and inventories of choice resales are growing scarce in many markets.
  • Foreclosures have run their course.
  • Resale prices have slowed their decline and will begin to rise.
  • The costs of many commodities are going up; new home prices will follow.
  • New home sales Incentives are down sharply from peak levels.
  • Mortgage rates have hit their historic low.
  • Website traffic to homebuilders’ sites is at an all-time high.
  • Foot traffic thru homebuilders’ model homes posted double-digit improvements last quarter.
  • In sub-sectors, the strongest job improvement over the last three months occurred for residential building construction (up 6.3%) followed by residential trade contractors (up 0.6%).
  • It is an election year.
  • Politicians realize the importance of housing activity to their electability. The mid-70s and early-90s housing recoveries began during election years.

Knowing these statistics, even the Magic 8 Ball must agree “All signs point to YES.”

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