In the midst of the COVID-19 pandemic, the housing market saw quite the boom.
Despite a pandemic drastically changing normal life, housing sales skyrocketed to levels not seen in years.
The reason? 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.
While the pandemic is becoming a distant memory, the housing market remains … an interesting place. And many of the same issues future homeowners encountered still persist.
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 New 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 An Existing Home: You Get What You Pay For
Remember that boom we talked about?
It slowed down in 2021 and continued through 2023. Yet mortgage rates reached their highest level in October 2023.
Still, last year saw many promising indicators for this upcoming year. According to a December 2023 report by Realtor.com:
- The number of homes actively for sale was notably higher compared to last year, growing by 4.9%.
- The total number of unsold homes, including homes that are under contract, increased by 3.6% compared to last year.
- Home sellers were more active this December, with 9.1% more newly listed homes compared to last year.
- The median price of homes for sale this December remained relatively stable compared to the same time last year, growing by 1.2%.
- Homes spent 61 days on the market, which is four days shorter than last year and about two weeks shorter than before the COVID-19 pandemic.
And while the housing market in 2024 will remain tight (more on this later), it will likely not be as tough as it was during the pandemic years.
With a real estate market expected to be still difficult, 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. You’re likely 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.
2024 Housing Market Forecast
Housing market predictions for 2024 all point to a mixed bag of factors, but an overall positive outlook. Of note, inventory will still be an issue.
- Mortgage Rates: Fannie Mae expects mortgage rates to decline in 2024, potentially dropping below 6%. This decrease is predicted to boost refinance volumes and stimulate the existing home sales market. However, a full recovery to pre-pandemic sales rates might take years due to ongoing affordability issues and a limited supply.
- Home Sales and Prices: According to Freddie Mac, home sales are expected to grow modestly in 2024 due to limited inventory. High demand, particularly from Millennial first-time homebuyers, is projected to push home prices up, with an increase of 2.8% forecasted for 2024 and 2.0% for 2025.
- Home Price Growth and Sales: Logan Mohtashami from HousingWire suggests low single-digit national home-price gains for 2024, similar to 2023. Consistent sales growth in existing homes is expected to require lower mortgage rates.
- Overall Market Outlook: Realtor.com's forecast, suggests some relief for homebuyers in 2024, with a slight decrease in mortgage rates and housing prices. This could lead to small gains in affordability, helping some buyers enter the market. Renters might also see improved conditions due to new construction.
On the custom home building front for 2024, things are also a bit mixed. Despite relief from 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 did diminish in light of higher interest rates. Still, with anticipated improvements – such as fuel costs going down – and some time, confidence is expected to go back up.
We’re already seeing the signs of that – new home permits are already up this year, as is builder optimism.
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!
