Builders Predict Big Expansion in Construction

Construction of single-family homes is expected to gradually rise this year, as a growing economy, solid employment gains, and rising household formation buoys builders’ forecasts.

Last year, the National Association of Home Builders projected 1.16 million total housing starts in 2016, which was up nearly 5 percent from the previous year. Now NAHB is forecasting a 10 percent increase in single-family production for 2017 and a 12 percent rise for 2018.

Still, there will be pressing challenges as builders look to increase their supplies this year. “While positive developments on the demand side will support solid growth in the single-family housing sector in 2017, builders in many markets continue to face supply-side constraints led by the three Ls — lots, labor and lending,” says NAHB chief economist Robert Dietz. Sixty-four percent of builders reported “low” or “very low” lot supplies. “The industry needs to recruit more workers and get more land in the pipeline, but it will take time.”

Builders are particularly facing challenges building $200,000-range entry-level homes. Regulatory requirements comprise nearly 25 percent of the cost of a new home, which has made construction on lower-cost homes more difficult, Dietz says. Nevertheless, townhome construction, which tends to appeal to younger buyers, is already showing significant growth, comprising 12 percent of all single-family starts, Dietz says. “As millennials age, that is a big potential base to expand the home buyer market,” adds Frank Nothaft, CoreLogic’s chief economist.

While higher mortgage rates may soften demand this year, builders remain upbeat. NAHB forecasts mortgage interest rates to average 4.5 percent in 2017 and then 5.3 percent in 2018. “Higher mortgage rates will be offset by stronger wage gains and job growth, which suggests that housing demand will increase this year,” says David Berson, chief economist for Nationwide Mutual Insurance Co. “The question is: How much will supply go up?”

Many metro areas nationwide are seeing solid job growth, dropping mortgage delinquency rates, and strong housing price gains, Berson notes. He says demand has been exceeding supply and likely will continue to do so in 2017. That could put more pressure on home prices, however. “If there aren’t enough homes on the market, that will be a problem,” Berson syas. “Price gains need to moderate. We can’t have 6, 7, or 8 percent gains. That is not sustainable.”

Source: National Association of Home Builders

Which Is Cheaper: To Buy or Build New?

MP900202134[1]On the surface, buying an existing home seems like the most affordable route to go. After all, the median cost of an existing single-family home is $223,000. On the other hand, the average cost for building new construction averages $289,415.

Obviously, there is quite a bit of variations in sorting out those costs. Plus, the price you pay upfront is only part of the equation when deciding to buy an existing home or build a new one.

A recent article at realtor.com® laid out some of the pros and cons financially of buying a new versus an existing home. Make some of these considerations when weighing the best financial decision:

Square footage: New-homes tend to be more spacious than existing ones at a median size of 2,467 square feet. As such, when you take the average cost of a new build, it breaks down nationally to about $103 per square foot, which is actually lower than the cost of existing homes.

Finishes: With an existing home you inherit all the features and finishes, even if you don’t want them. That may mean you need to budget in some renovations if you’d like to redo anything. With a new home, you’ll be able to choose all the features and finishes yourself and have it set in the price from the get-go. 

Maintenance: Older homes tend to require more maintenance. The cost of upkeep can be pricey too, depending on what needs to be done. For example, the average furnace tends to last about 20 years. When it needs replacement, expect to pay about $4,000. Not to mention, that shingled roof will likely need replacement after about 25 years at a cost of at least $5,000. On the other hand, newer homes tend to need less maintenance because all of the major appliances are brand new and under warranty.

Energy efficiency: Older homes tend to have dated windows and appliances, which can result in less energy efficiency and pricier energy bills. New construction tends to nearly always trump older homes in energy efficiency, according to Kyle Alfriend with the Alfriend Real Group RE/MAX in Ohio. Indeed, homes built post-2000 consume 21 percent less energy for heating than older homes.

Landscaping: Older homes tend to have mature landscaping already in place. And that landscaping can up a person’s property value by thousands. Further, those trees can save an estimated 56 percent on your annual air conditioning bill, according to the U.S. Forest Service. With newer homes, you’ll have to likely pay thousands to install landscaping and may have to wait years to get it to the point you desire.

Appreciation: With an older home, you can see the trajectory of prices based on previous sales prices and of comps nearby. New homes can be a gamble since they do not come with a proven track record of plentiful comps that have been tested over time.

Source: “Is it Cheaper to Buy or Build a House? Compare the Pros and Cons,” realtor.com® (Jan. 5, 2017)

Five home-buying trends for this year’s market

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5 top home-buying trends for this year’s market

(BPT) – If you’re in the market for a new house this year, don’t be fooled by the brisk chill in the air – the spring house-hunting season is actually closer than you think. That means now is the perfect time to start your planning. Space requirements such as bedrooms, bathrooms and square footage are essential, but a house is more than just shelter, it’s your home, and the great ones not only have everything you need, but everything you want.

“Each family lives in their home differently,” says Beazer Homes Senior Creative Manager Michael Phillips. “Some buyers prefer a private dining room, while others want an open-concept kitchen with a more casual eating area. Where one buyer might prefer an owner’s suite on the main level, others may want all their bedrooms on the upper level.”

Although every home buyer’s needs are unique, the market is often dictated by common trends. To better understand your own buying preferences and to see if you’re aligned with others in the real estate marketplace, take a look at these five home-buying trends.

1. Function over aesthetics. When you think kitchen trends, you probably think of design features like granite countertops and stainless steel appliances. While both these options remain popular and are common in new construction, surveys by the National Association of Realtors and the National Association of Home Builders (NAHB) found that buyers were extremely interested in functional attributes like new appliances, eat-in layouts, walk-in pantries and double sinks.

2. Living roo23268680ms are no longer a must. Given today’s diverse home-buying population, the formal living room is becoming less prevalent. “Many buyers would rather use traditional living room square footage in a new way,” said Phillips. “We’re seeing families using the living room as a home office or choosing to forgo the space altogether in exchange for extra square footage in other areas of the home.”

3. New is number one. According to the NAHB, more than half of surveyed buyers want to purchase a new home. It can be a challenge for buyers to find everything they desire in a resale home, and because renovations are often costly and time consuming, it’s hard to deny the appeal of purchasing a brand-new home that is move-in ready.

4. Let there be (energy-efficient) light. Home buyers have coveted homes that make good use of natural light for years and that trend is continuing in 2016. In addition to large windows, NAHB research shows homeowners are putting an increased emphasis on the energy savings that accompany the installation of high-performance windows.

5. Make it your own. Personalizing a new home is easier and more affordable than ever before, thanks to offerings like Beazer’s Choice Plans, which are flexible floorplans that allow you to personalize the most lived-in spaces in your home at no additional cost. Whether you want a kitchen for entertaining or a breakfast nook for family dining, an office space instead of an extra bedroom, you choose … and Beazer won’t charge you for selecting the best layout for your lifestyle. You can learn more about your options and how to create your own dream home at www.beazer.com/choice-plans.

Start your preparation today

It’s never too early to start preparing for shopping for a new home. The more work you do ahead of time, the more time you can spend exploring the market. So start your research now and you’ll be moved into the home of your dreams before you know it.

Put Teresa’s knowledge and expertise of the building industry to work for you to find your new home. Learn more.

Let’s get started! 614-565-8161 or Teresa@TeresaButler.com

Do I Need a Real Estate Agent to Buy from a Builder?

MP900202134[1]Q: Do I need to hire a real estate agent to represent me when I buy a new home from a builder?

A: Legally, no. But if you don’t, you might be missing out on some tangible benefits that impact your wallet and how much you get for your money.

There are many reasons why an agent is a sound investment during the purchase process with a builder. While some of them can be quite complex (and go beyond the scope of this blog post), here are a few highlights:

Market Value Compared to Purchase Price: How much money are you going to be able to come out of pocket for your down payment? If you don’t want a nasty surprise when it comes to disparities between your agreed upon purchase price and the actual market value of the home, you’ll want an agent with access to information which will help you accurately assess the true value of that brand new home.

Negotiation Power: Real estate agents are professional negotiators, and often an agent can get more from a builder than you would on your own. While some of this might be related to purchase price, other perks may include property or home upgrades.

Financing: It’s probably no surprise that your builder will have preferred financing partners to work with. Many of those “partners” pay good money for the opportunity to handle your loan. But is it the best loan at the best rate? An agent can be both a sounding board for financing terms and a source for trusted alternatives.

Contract Expertise: While your real estate agent isn’t an attorney, they know a great deal about the ins-and-outs of property contracts. This includes builder’s contracts, which may have provisions that put you in dicey territory should something unforeseen happen. Protect yourself with an agent.

These four reasons are a good place to start, but there are plenty more. The bottom line is: The builder will have their own system in place to maximize their profit and minimize their costs. Shouldn’t you?

For more information about how Teresa helps you through the building process click here.

I’m more than happy to help you buy from a builder: 614-565-8161, Teresa@TeresaButler.com or fill out the Contact Form

New Homes Get Supersized

4The median size of a completed new home last year bloomed to a new record – 2,415 square feet, according to the Commerce Department. But will the supersize trend stick?

During the recession, home sizes got smaller as builders downsized new homes to compete with the flood of discounted foreclosures on the market. The downsizing trend had some housing analysts believe it would be a lasting one, lingering long after the recession.

“All the pundits said ‘the McMansion is dead,’” Douglas Yearley, chief executive of Toll Brothers Inc., a luxury home builder, told investors last fall. “But the American dream is still to chase the big beautiful home with the lavish master suite and the wine room and the media room.” Indeed, home sales recently have confirmed that.

Despite overall sluggish sales in the housing market recently, home sizes continued to rise as builders cater to affluent buyers’ tastes. Builders sold slightly more homes priced above $400,000 than those priced below $200,000 for the first time ever last year, the Commerce Department reports. What’s more, nearly 5 percent of homes sold for at least $750,000 – a record high.

But housing analysts aren’t betting home sizes will set any new records this year. The size of new homes started heading down late last year, which could signal that builders may be refocusing on homes for entry-level buyers in looking to increase sales in 2015, The Wall Street Journal reports.

Source: “U.S. New-Home Sizes Set Record Last Year,” The Wall Street Journal

New-Home Sales Stay Resilient

19576338_webSales of newly built, single-family homes barely budged in January, staying near an elevated December sales reading, according to the latest report from the U.S. Department of Housing and Urban Development and U.S. Census Bureau. For the past two months, new-home sales have been trending at post-recession highs.

“The fact that January sales numbers maintained the gains we made in December is encouraging news, especially consideringharsh weather affecting certain parts of the country,”  said Tom Woods, chairman of the National Association of Home Builders.

New-home, single-family sales dropped 0.2 percent in January, reaching a seasonally adjusted annual rate of 481,000 units. Inventories of new homes for sale were at a 5.4-month supply at the current sales pace in January.

Regionally, new-home sales rose by the largest amounts in the Midwest in January, increasing 19.2 percent in January. New-home sales also rose in the South, by 2.2 percent.

However, new-home sales plummeted in the Northeast, falling 51.6 percent in January, and largely attributed to harsh weather conditions this winter. New-home sales also fell 0.8 percent in the West.

Source: National Association of Home Builders

Designers, Builders Reveal Hot Trends for 2015

jan15_HD_nahbAt the combined International Builders Show and the Kitchen & Bath Industry Show in Las Vegas last week, REALTOR® Magazine picked up three key trends to watch for in the coming year and beyond.

Foodies Changing Mainstream Kitchen Design

Designers and builders are starting to realize this foodie thing isn’t just a passing phase, and many are thinking about how best to serve a growing niche in kitchen design.

“Think about different questions to ask home owners about their food acquisition,” says Judith A. Neary, principal of Roadside Attraction Design Studio LLC in Vashon Island, Wash. “Do you have a garden? Do you do canning? Where do you store that? I have to have these conversations with them. We’re trying to plan a kitchen solution for that.”

These changes are also reflected in appliances, with foodies demanding high-temperature cooking options—in excess of 700 F. There’s also been an increase in interest in induction cooking, which heats pots using strong magnets, according to chef and author Jan D’Atri.

“I don’t think the technology was there before. Now it is, and it’s a great option.”

D’Atri also predicts high-end consumers will soon expect newer cooking options, such as the combi ovens (a steam and convection oven rolled into one) instead of a traditional second oven.

But small changes can make a big difference in the foodie kitchen of tomorrow, too. “It’s all about being really thoughtful about the things that are going to make a difference,” says Karman Hotchkiss, executive editor for Better Homes and Gardens’ Special Interest Media. She notes that a niche within the larger foodie niche, the “baker’s kitchen,” often includes a surface with “little divots for bringing eggs up to temperature. That’s really thoughtful.”

Connected Devices May Stumble

This year’s show was buzzing with talk of smart home technology. But builders and designers were also told to be cautious in their embrace of emerging smart home technology.

“Be careful about who you hitch your wagon to,” says Jacob Atalla, vice president of sustainability initiatives at KB Home. He notes that there are a lot of relatively unknown companies serving up new home technology products, and there’s no guarantee how long they’ll be around or how well their products will work. “There could be some disappointments in the future, so we shouldn’t rush into it.”

Chad Davis, senior director of digital media at the National Association of Home Builders, says that while this new technology—which includes products that control a home’s HVAC, entertainment systems, and appliances from the cloud—is overhyped and destined for a reality check, that doesn’t mean that it’s not here for the long haul.

“You’re going to hear in the next few years, ‘This didn’t work. This is a disappointment.’ Don’t buy that,” Davis says. “This is a fundamental shift in what is going to happen with our industry.”

Gray Is Here to Stay, But It’ll Share the Stage

Which colors are residential designers gushing over most?

“Warm Stone is my new favorite paint color,” says Kay Green, president of Kay Green Design Inc. in Winter Park, Fla., of the Sherwin-Williams neutral shade. “Chocolate brown is the new black and gray is the new beige.”

Stephanie Moore, principle of Moore Design Group in Dallas, agrees. “Everything in color terms is going more gray,” she says, though “white is huge in this industry now; I didn’t think it would ever come back.” Moore suggests using light, medium, and dark elements when staging to implement these trends in an eye-pleasing way.

Gray has been popular for a while, but Green says there’s been a change in how grays are fitting into the residential color palette.

“Now we’re using it with teal and straw yellow,” she says. “It’s a much more interesting color than it used to be.”

One color trend that surprises Green is the popularity of avocado with millennials.

“I’m thinking, ‘Why are you so excited about this color?’” She says she later realized that it was a generational thing: “It’s because they didn’t have a refrigerator that color growing up!”

JANUARY 2015 | BY MEG WHITE

Hot Trend Watch: Tiny Homes

tiny house villageCould you imagine living in 97 square feet? Tiny houses – some might even call them teeny-tiny – are growing in popularity among buyers in the second home market. Some are even making them their primary residence.

Leaf House, a tiny home builder based out of Whitehorse, Yukon, Canada, has downsized from its 215-square-foot house that can sleep a family of four, to it’s most recent 97-square-foot model. The smaller version is constructed with vacuum insulation panels and is designed to withstand the extreme cold.

“Being so well insulated, the tiny house doesn’t need a lot of heating; In fact, all it has are two radiant electric panels totaling only 800 watts. We’re talking a hair dryer here, turned to low,” writes Lloyd Alter, managing editor of TreeHugger, in his recent review. Leaf House also builds custom tiny homes and can deliver the house or build it onsite.

But not all tiny homes are about extreme living – some are also designed to give the home owner a little luxury.

For example, Portland, Ore.-based home builder Tiny Heirloom specializes in luxury homes on wheels with 100 percent customizable floor plans, design, and insulation. Their base model packages start at $65,000, and comes with granite countertops, real-wood or bamboo flooring, stainless steel appliances, a washer/dryer combo unit, a wind or solar package, and more. They also throw in one flight from anywhere in the lower 48 states, to meet the team and see the home under construction.

The small home movement isn’t just for those who want to live off the grid, either. Country Livingmagazine has an entire section of their website dedicated to little homes, and recently published, “44 of the Most Impressive Tiny Houses You’ve Ever Seen,” highlighting small homes from all over the country.

Real estate pros should check their local ordinances on the minimum square footage requirement for a building permit – some tiny homes may not even need a building permit. Tiny homes are also an option for buyers seeking land for recreational purposes, such as hunting, fishing, or weekend getaways.

Source: “Leaf 3 is a tiny house designed for seriously cold climates,” Treehugger  and “Tiny houses are welcoming retreats,” The Courier-Journal

4 Things to Consider When Picking a Floor Plan

Factors that dictate what floor plan will work best for a home buyer include how old their children are, how they entertain, and whether they have pets, says Jeff Benach, a principal with Lexington Homes in the Chicago area.Here are some issues Benach suggests considering when buying a home:

Mudrooms. A spacious mud-room can make managing a young family’s comings and going much easier. They are also good for pet owners.

Over-sized kitchen/family-room combinations. These rooms work for some people, but they aren’t good for party givers because large spaces are noisy and don’t lend themselves to intense cooking and food staging.

Fireplaces and windows. Filling more than one wall with windows and occupying another with a fireplace makes it difficult to position furniture.

Consider that things change. Designing areas so they can be retooled to meet new and different needs down the road is a smart approach.

Source: Chicago Tribune, Allison E. Beatty (01/02/09)

New vs. Existing Homes

New home or previously owned? That is, perhaps, one of the first questions you may ask yourself in your home search process. Perhaps you’ve fantasized about purchasing a fixer-upper and giving it an extreme makeover. Or maybe you’ve always dreamed of building a home from the ground up and making all new color and appliance choices. Whichever way you’re leaning, you’ll want to weigh the pros and cons of both before you decide.
New homes offer:

Convenience and new amenities.
Standard options for new homes usually include amenities such as whirlpool tubs, central air/heat and large mirrors.

Peace of mind.

Safety devices such as smoke detectors, circuit breakers and ground fault interrupters come standard in newer homes. Also, new homes are subject to improved safety requirements, which means no-lead paint and asbestos-free insulation are used in its construction.

Comfort.

High-tech solutions in heating and cooling and state-of-the-art materials (such as windows) sometimes ensure a more comfortable, energy-efficient surrounding.
Existing homes offer:
Stability.
The hallmark of an existing home is a well-developed neighborhood with established zoning laws and school districts.
Resale value.
The return-on-investment for an existing home is often greater; especially in historic neighborhoods where the entire area is undergoing renovation and experiencing an upswing in property values.
Savings.
Typically, there’s more room for negotiation — especially when it comes to incorporating items such as a repair allowance. In addition, expect to save money on “hidden” costs such as landscaping, unforeseen repairs or dues for a homeowner’s association.
Keep in mind that both choices have associated costs. New homes are subject to elevated construction and lumber costs, while existing homes often require some type of repair or remodel. If you’re thinking of remodeling, be sure to get an idea of common remodeling costs for existing homes.
Regardless of whether you choose a new or existing home, one thing’s certain: home ownership remains a strong investment and home improvement a good re-investment of your financial resources.
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