For Immediate Release
Contact: Chellee Siewert, Metropolitan Builders Association Executive Director – 262.436.1122
Housing ‘Window of Opportunity’ May Be Closing
(Waukesha, WI) – August 11, 2008– With near-record low interest rates, competitive prices and a large selection of homes to choose from, the current market strongly favors new home buyers. But economic conditions indicate that consumers who are sitting on the fence hoping to get a better deal probably shouldn’t wait any longer, according to the Metropolitan Builders Association.
“Changes in interest rates, cost of building materials and inventory of unsold homes will have an impact on the buyer’s market,” said Chellee Siewert, president of the Metropolitan Builders Association. “Buyers who take advantage of today’s optimum conditions can get more value in a home than they could just a few years ago, but it’s not going to last forever.”
Interest rates, although lower than they were a year ago, have started to move up. Rates on 30-year Freddie Mac fixed-rate conforming loans are a half percent higher than they were two months ago in April. And Business Week’s senior editor and senior economist James Cooper recently wrote that “On June 11, the future’s market was betting heavily on at least one increase in the Fed’s target rate in the second half of the year.”
What it costs to build a new home is likely to increase as well, which builders will have to reflect in their prices. According to Bernard Markstein, senior economist for the National Association of Home Builders (NAHB), “Higher energy prices and industrial expansion in the rest of the world are continuing to put additional upward pressure on construction material prices. Already, prices for building materials for single-family new construction, which were rising by about 2.5 percent until a few months ago, increased 4.7 percent from May 2007 to May 2008.”
Finally, builders today are offering attractive incentives to sell surplus inventory. But they are also adjusting their production in the slowdown, so when the homes currently on the market are sold, there won’t be as many to choose from for the next couple of years. And builders will not be as inclined to make deals.
Home values in the United States have proven to be a sound investment. Home values in Milwaukee County have increased 153% from 1990 to 2007, averaging a 9% annual increase (1). In addition, homeownership rates remain at near record levels at 69% nationally (2). The Midwest has the highest homeownership rate at just under 73%. According to the National Association of Realtors, 2007 was the fifth best year in the history of the real estate industry with over 5.92 million homes sold nationwide (3).
“Owning a home remains the best way for families to grow their wealth over the long term, and a fixed-rate mortgage protects you against increases in rent that could come with inflation,” said Siewert. “New homes also provide great energy-efficiency that will benefit the family for years to come. Ultimately, a purchase of a home is an investment in your family and your community.”
(1) Multiple Listing Service, Inc.
(2) Mortgage Bankers Association
(3) National Association of Realtors
To learn more about the unique buying opportunities today’s housing market has to offer, visit www.whybuildnow.com.
