Is it the Right Time to Build Your Dream Home? 

There is no question that we have seen significant changes in the housing market within the last few years. The question that many people are asking is: should I build a home now, or should I wait for the housing market to change again?  

In 2019, mortgage rates were on average 3.94% which was a decrease given they were 4.54% in 2018 and the 2019 predictions had shown they could rise to above 5.5%. The industry could not predict the effects of the COVID-19 Pandemic and mortgage rates dropped to a surprisingly low level. In July 2020, the rate of a 30-year fixed loan averaged below 3%, and in January 2021, they were at a record low of 2.65%. Given the averages of mortgage rates being so low, it makes sense for prospective buyers to be concerned to see that rates are rising in 2022. The industry has seen an increase of 3.76% to 4.16% just within the month of March.  

Beyond the fear of rising interest rates, there are other concerns to consider when determining whether right now is the time to build your dream home. The Pandemic caused significant changes to our housing market and the demand for homes surpassed the market’s supply. This caused significant price increases for homes on the market. In home building, we saw many of the same effects by having lumber price increases and a decrease in supply that caused our build times to increase and our prices to increase. However, with mortgage rates being so low, many buyers still found buying or building to be an affordable option. 

Now that the market is changing again to higher mortgage rates and price increases based on supply, demand, and inflation, the question of whether or not now is the time to build is very present in the minds of prospective homeowners.  

Even with the changes we have seen, there are many positives to choosing to build in the current market. One factor to take into consideration with building a home is the short supply of used homes currently on the market. Choosing to build a home allows you to create your own dream home rather than making a fast decision and settling for a home that is on the market but does not meet your family’s needs. 

Many prospective homeowners look at today’s market and see costs and rates rising and think that waiting for the market to come back down is their best option. However, historically we see supply and demand increasing rapidly which causes pricing to increase. On the other side, we typically see prices decrease at a much slower rate. Currently, the demand for new homes is high in our markets in North and South Carolina without there being an end sight as to when it will decrease for prices to decrease.  

During 2020 and 2021 we saw incredibly low mortgage rates, and even though they have increased in 2022, they are still historically low compared to years past. Another important thing to note is that home equity is still rapidly rising. If you already own land, you likely have more to put towards a home or down payment than ever before.  

Considering the uncertainty of when the market will begin to even out, and the potential for more pricing increases and rising interest rates, choosing to build now could be the best option. Prospective homeowners can build the home that best suits their family’s needs with a locked in price and interest rate.   

If you are interested in learning more, we sat down with our Preferred Lender Partner Daniel McCoy with Intercoastal Mortgage to discuss the current market trends in our area! Click here to watch the video!