In the midst of the COVID-19 pandemic, one market saw new. For the last two years, the housing market saw quite the boom.
Despite a pandemic drastically changing normal life, housing sales skyrocketed to levels not seen in years.
It’s somewhat complicated, but there are three contributing factors:
- Lower mortgage interest rates
- Millennials entering the market as first-time homebuyers
- Homeowners realized they needed more space as the COVID-19 pandemic forced them to spend more time at home.
We’re often contacted by home buyers who think building a custom home will be easier on their wallets than purchasing an existing home. Many think the custom home building process is an expeditious way to get into their next home. Their perception is largely fueled by what they are seeing as a result of the housing boom -- limited housing stock, bidding wars, price escalation, and many homes requiring varying levels of investment to be brought up to date.
While there is an ebb and flow to the real estate market, custom home building remains a steadfast option for those who want a home that’s truly theirs.
The Value of Building a Custom Home
While constructing a new home isn’t necessarily faster or less expensive than purchasing an existing home, there is a value in building your home that you can’t put a price on.
Moving into a home is a major milestone in life -- the kind where you take a picture with your family to remember the moment. Imagine walking into your newly constructed home and already knowing every square inch of it. Imagine the peace of mind you’ll have not having to worry about any surprises from the last owner which can negate any cost savings.
Building a home is a long-term investment -- you can rest assured it was constructed using modern materials and to the latest building standards.
Most of all, imagine the sense of pride you’ll have knowing that your home is one you designed to meet all your needs.
Barden Building Products and our network of Barden Independent Dealers love working with future homeowners to make their vision of their dream home a reality. Our team of in-house designers is happy to help you design your next home or modify one of our existing floor plans.
Buying Existing: You Get What You Pay For
Remember that boom we talked about?
It slowed down during 2021 and has continued trending toward pre-pandemic levels. According to an October 2021 housing report by Realtor.com:
- The national inventory of active listings declined by 21.9% from 2021 while the total inventory of unsold homes, including pending listings, declined by 14.8%. The inventory of active listings is down 51.9% compared to 2019.
- Newly listed declined by 2.3% nationally compared to the prior year, and down 4.8% for large metros over the past year. Sellers are still listing at rates 11.6% lower than typical 2017 to 2019 levels.
- The October national median listing price for active listings was $380,000, up 8.6% compared to last year and up 21.8% compared to 2019. In large metros, median listing prices grew by 5.2% compared to last year, on average.
- Nationally, the typical home spent 45 days on the market in October, down 8 days from the same time last year and down 21 days from 2019.
And while the housing market in 2022 will remain tight (more on this later), it will likely not be as high as it was in 2020. Still, the housing shortage is expected to remain a part of the market.
With a real estate market expected to remain tight, getting a house that meets all your needs exactly is going to be tough. The existing homes out there weren’t built with your family specifically in mind. It’s likely you’re going to have to make some compromises.
To an extent, purchasing an existing home is like buying a used car.
Newer used vehicles cost more. So do newer homes. If it’s not taken care of properly, a used vehicle can quickly become a money trap. The same can be said for existing homes -- years of neglect do eventually catch up.
To take this metaphor in another direction, just like a classic car, older homes weren’t built using the latest standards or modern materials. Eventually, something is going to need replacement. And sourcing period-appropriate components get more challenging as time goes by. Installing contemporary elements or using methods considered standard today can be a headache, too.
2022 Housing Market Forecast
Housing market predictions for 2022 all point to things continuing to settle down with the existing real estate inventory. However, market experts expect buying and selling homes to still remain fiercely competitive.
As of the fall of 2021, there’s a supply shortage of about five million homes against the existing demand. And that shortage isn’t expected to let up any time soon. For home buyers, not only will it be harder to find a new house, but it will likely be more expensive than during pre-pandemic times.
What’s more, industry analysts worry that the combination of factors that contributed to the housing boom is actually representative of a housing bubble that could burst. In other words, the housing market could go back to pre-pandemic levels quickly if potential home buyers decide to stay put until demand and prices decrease.
On the custom home building front for 2022, things appear to be on the upswing. Despite supply chain issues driving up costs for building materials such as lumber, the confidence levels of those turning to new home construction and home builders are increasing.
Another positive sign for new home construction in 2022 is that despite a dip in the number of new homes being built, the number of permits for new houses increased.
Building A Custom Home to Make a Better Investment
Deciding on your next home is one of the biggest decisions you’ll ever make. Whether it’s custom built or an existing home, it’s a major expense that you’ll quite literally live with for years.
Though building a custom home may not be the least expensive option in terms of up-front costs, its long-term value is something that money can’t buy.
Interested in learning more about what it takes to build a custom home?
Check out our Custom Home Building Guide!