We have seen several home builders halt new construction sales for several reasons. The two major reason are costs and quality control.
Costs are rising rapidly. For instance, lumber costs have skyrocketed recently. I found an article online that said the lumber price spike has added about $16,000 to the typical home nationwide. Lumber is just one component in a home. Home builders are literally outselling what they can build in SW Florida, and they must be careful.
If you outsell what you can build, it adds to the build times. As you add to the build time, there is more chance for increased costs. In a hot market you would hate to contract for a home and lose money on it by the time you get it built. Even if they do not lose money, they want to maximize profit.
Homebuilders Selling Too Fast
One homebuilder said they were selling a home every 50 minutes. We know of several builders locally that have limited what their sales agents can sell. These limits can change daily. Overselling is bad for two reasons. You do not want to set the expectation it will take 6-9 months and deliver the home in 18 months. Customers will not like that. Secondly, they do not know what costs 18 months from now will be. Costs are going up, so they need to raise the home prices to cover those costs.
When shopping for a new home it pays to work with a Realtor that knows who can build and where the inventory is. Occasionally new home sales fall out and the buyer cannot close. If you work with an experienced Realtor with connections, you may find out about these homes first. If you’re late, you’re last.
Resale Market Hot
The resale market is still a place to keep an eye on too. New resales enter the market daily, but not enough to satisfy demand. Speed is the name of the game when it comes to securing a new or resale home. Make sure you are pre-approved for a mortgage. If it takes you a day or two to get pre-approved, you have already lost. Do that first before you go home shopping.
Remember, you are not negotiating against the home seller. Your competition is all the other buyers shopping to get the same home you are looking at. Structuring your offer to win is the key. This is where an experienced agent can help. What seems like good terms to you may not be the best offer to the seller. An experienced agent knows how to make your offer look stronger. Price is just one factor, and you can only bid so high. There are plenty of other factors along with price that can make or break your offer.
Sellers Pay Attention
Sellers, it is time to pay attention! There has never been a better time to sell your home. I just put my own home on the market. I am taking my own advice. There is more demand than there is supply. Buyers are forced to offer full price or more in many cases to win a home.
As builders raise their prices it will help pull resale home prices up with it. We have seen home builders increase their prices over $100,000 in some neighborhoods in the past few months.
Interest rates are low. Demand is high. If you are thinking of selling, call Brett or Sande Ellis 239-310-6500. For a free instant value of your home check out www.SWFLhomevalues.com. Not only will you get an instant price, our system will also email you each month your home’s value change in value. That is a handy tool in this market.
If you are buying, go to www.LeeCountyOnline.com It is updated in real-time which means you will have the best data. Remember, speed wins in this market.
Good luck, and Always Call the Ellis Team at Keller Williams Realty with your real estate needs!