Home buyers are looking to home builders to fill the void in low home inventory; new home builders seizing opportunity to capitalize on housing market conditions.
If you’re a frustrated home buyer actively looking to for a house, you may have realized that the pickings are slim. You’re not alone if you feel exasperated after months of looking for your dream home; you may have also lost out in a multi-offer scenario. If you feel you’re ready to give up for and rent, take heart; home builders are jumping in to fill the void.
Even the National Association of Realtors® (June 21st) reported that the limited housing inventory has held back sales of existing homes. Chief NAR Economist, Lawrence Yun stated in the press release, “The slight pullback in monthly home sales is more likely due to supply constraints rather than softening demand. The normal seasonal upturn in inventory did not occur this spring… (realtor.org).
According to the NAR, total housing inventory decreased 0.4%, which resulted in about 2.49 million existing homes for sale (or about a 6.6 month supply). Furthermore, housing inventory is 20.4% less than the same time last year; when there was a 9.1 month supply of homes for sale.
Local inventory numbers reported by the Greater Capital Area Association of Realtors® (gcaar.com) is consistent with the national decrease in housing inventory. GCAAR reported that year to date listings through May of single family homes in Montgomery County is about 18.7% lower than listings from the prior year through the same period.
Although the shortage of home listings seems to be holding back the re-sale market, home builders appear to be seizing on an opportunity; new single family home sales are at a two year high, according to Reuters (New home sales race to two-year high in May; June 25, 2012). Many home buyers, dissatisfied with existing homes listed for sale, are opting to purchase new.
The National Association of Home Builders (nahb.com) reported on June 18th that home builder confidence is at its highest since May 2007. And why not? Home builders are capitalizing on what seems to be a stagnant re-sale market. Increased sales are coming from those disappointed home buyers who cannot find a re-sale home but want to take advantage of the combined low prices and mortgage interest rates.
Clients of new home builders are also finding there are additional benefits to owning a brand new home: In addition to having new systems, many components are energy efficient; floor plans tend to be contemporary; and exterior designs are trendy. Another benefit of buying “new” is that, unless the home is not spec (already built, often a model home), you may have an opportunity to choose finishes and upgrades; everything will be ready for you to move in. What’s more is that you typically get warranties on the appliances and systems in a new home, so if something doesn’t work properly you can usually get it fixed – as long as it is covered and within the warranty period.
If you’ve not yet looked into purchasing a new home, ask your real estate agent for ideas of what’s available in new home communities, custom homes, or through spec builders. Home builders often list their inventory in the local MLS as well as advertising on various websites. When you visit a home builder, take your agent along with you; they may have knowledge of buyer incentives and closeout models that builders are trying to sell first.