Building a Home Now--Smart Move?

[Idaho_Potato]

Corb, much of it hinges on '24, imho. We lose, we really lose bigtime. The system as we know it collapses. I firmly believe that, and most here know me as an optimist. I'm the guy that held a stock for hundreds of K's profit over the better part of four years through FJB.

BUT....the system can only take so much debt, illegal immigration, bankruptcy, loan default, etc. The drain on the system is enormous. And this doesn't even touch on those who hate this country. They want it to fail. We could be screwed, it could go either way, but it isn't good. The contractor smiling in the frog pot will be just as boiled as anyone else, whether he realizes it or not.

The crash has been juuuuuuusssst around the corner since covid. Funny, my house still hasn’t decreased in value. I was born in the late 80s and I don’t think my generation will ever see a 2008 drop in our lifetimes. Boomer money is starting to filter down the lines. They ain’t making more land. Get your house/land/asset situation figured the F out because if you wait for things to get cheaper I’m afraid you will die waiting.

 

[DillanF]

I don't think now is the time.. yet. I think in about a year material prices will have continued to drop and interest rates will have flattened (still high) and then a couple years (6-10) down the road you can refinance. We're getting close, but I'm personally choosing to wait and be patient.

 

[displacedtexan]

Who said that 'no one is building'?....your words.
Enjoy while you can, seriously, get it done.

If '24 goes badly, the tough 13% times are coming even if you have no comprehension of what could be on the horizon. The bankruptcies of '08-'10....foreclosures, auctions. Insanity.

OP said it.

 

[Fowl Play]

I honestly believe the material costs being so high right now is partially a racket.

There is probably enough brand spanking new lumber sitting on docks in Port Canaveral, FL to build thousands of homes. Similar situation in Port of Tampa I’ve been to as well. It’s been sitting there for over a year, literally unloaded from cargo ships and sat. No idea why. It’s ridiculous. Between the two ports I’m talking like over 150 acres of lumber stacked 40 feet high. Similar situation elsewhere. No idea if it’s intentionally restricting the market to drive up costs or what. If anyone wants contacts for the dock owners to investigate buying some let me know.

Maybe every month or so there’s a flurry of flat beds that come take a small dent out of it. I swear the stacks so big every time 20 or so 18 wheelers depart, I can’t tell where they took it from.

 

[DenverCountryBoy]

Get your plans and engineering done. Once those are approved, you can take a look and see if it is go time or to wait.

 

[grfox92]

Material prices have essentially stabilized from where they were 2 years ago. Sheeting that was $60 last year is back down to $15.40 a sheet as of today. Pre covid it was $11 a sheet.

It's never going back to $11 a sheet. $15 is the new low price. Every single good that is sold I'm the US has skyrocketed in price. Building materials aren't any different.

I wouldn't let material cost influence your decision. As long as you have adjusted your budget correctly for 7% interest rate..if you.can appropriately afford the payment there is no reason to put your life on hold hoping interest rates go down to what they were 3 years ago.


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[TandKHunting]

Nobody knows when interest rates will go down. I have two sisters that are Realtors and they have been told rates will go down in "6 months" every 6 months for the past 1-2 years.

Investing in assets is never a bad thing...

A majority of American's are buying trips to Cancun on credit cards that will take them 5 years to pay off.

 

[TaperPin]

Our neighbor just finished his build and they moved in. It’s twice the square footage what he had - everyone said it’s too big. It’s in a very desirable location - everyone told him that extra cost is down the drain. Material costs were super high at times - he was told there’s no way to make the budget. Lead times for a lot of stuff were too long - everyone said he’ll never move in on time.

If you ask him, the worst possible time to build is better than not building at all.

 

[akcabin]

We are currently building our new retirement home. We are able to do all of the work ourselves. Takes time and saves money. I've more time than money. Material costs are what they are. My beautiful wife has saved us a lot of money buying supplies.
It will be nice to have a new home paid for. For us, if you wait until you have the time and money at the same time you may be waiting a while.

 

[Happy Antelope]

We're building a home right now in Park City utah, I can tell you that my cost to build is 50% of what it would cost to buy.
Locked in our lumber a couple months ago and it was pretty close towards the bottom. Steel came in a lot cheaper than I assumed.

Good luck on your adventure hope you post some pictures pretty cool experience to build a shelter for your family.

Paul

 

[Fowl Play]

Nobody knows when interest rates will go down. I have two sisters that are Realtors and they have been told rates will go down in "6 months" every 6 months for the past 1-2 years.

Investing in assets is never a bad thing...

A majority of American's are buying trips to Cancun on credit cards that will take them 5 years to pay off.

Only thing I will say is to be careful with the current market. As long as your financials are sound go for it. But if I had a perfectly good house, and had to take out a construction loan right now at these rates to build a new one… I’d think hard about it.

Don’t know the OPs situation, but don’t fall into the fallacy that your primary residence (or any residence not generating income) is an asset. It is 100% a liability. Maybe an asset to your kids or whoever may sell it down the road… just not for you and especially not financing at the rates right now.

 

[TandKHunting]

Only thing I will say is to be careful with the current market. As long as your financials are sound go for it. But if I had a perfectly good house, and had to take out a construction loan right now at these rates to build a new one… I’d think hard about it.

Don’t know the OPs situation, but don’t fall into the fallacy that your primary residence (or any residence not generating income) is an asset. It is 100% a liability. Maybe an asset to your kids or whoever may sell it down the road… just not for you and especially not financing at the rates right now.

I would argue that a house is an asset unless you have zero equity. You are building wealth by making a house payment versus making a rent payment. Many people use equity within their homes to purchase rental properties, businesses, etc that generate revenue.

Assets and liabilities can be interchangeable depending on who you ask. Everyone's opinion is different.

 

[WRO]

Things are softening in it sub market, get multiple bids it could be good.


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[cornfedkiller]

I can't answer your question on what you should do, and I don't follow the housing market much (and I'm certainly no expert on trends, speculations, etc), but I don't know if there has ever been a cheap time to build..

I can remember my parents building a house in 1997 and talking about how expensive it was.. it was $70/sq ft.

And then my wife and I built a house in 2020 and I remember how expensive I thought everything was then...

 

[Silver Wings]

I’d ask myself 2 questions.
What will it cost to build the house I want?
What will its market value be when finished?

My neighbor’s paid off home burned in the Creek Fire in 2020. They just finished rebuilding about 6 months ago, using insurance money. Even with the land and utilities already in place the house doesn’t even appraise for the cost of construction.

That don’t work if you’re financing.

 

[Fowl Play]

I would argue that a house is an asset unless you have zero equity. You are building wealth by making a house payment versus making a rent payment. Many people use equity within their homes to purchase rental properties, businesses, etc that generate revenue.

Assets and liabilities can be interchangeable depending on who you ask. Everyone's opinion is different.

Every situations different but here’s a quick breakdown of how I think about it, and why I do not believe a personal residence is an asset. I choose to own because it has lots of other benefits to me, but in this market I would be better off renting and putting the rest of the money into investments. Don’t want to derail too much, but the math is good to just see how the current mortgage/loan rates affect it.

Between purchase and sale: 6% home value for realtors
Property tax: 1% per year
Insurance 1% per year
Maintenance 1% per year
Mortgage 8% per year

If I live in that home for 8 years then sell. I’ve darn near paid 100% of the home value in “fees”. That’s not equity. And many of those “fees” track with the value increase of the house.

Now of course this changes based on local rates, how much I put down, etc. but the math is still roughly the same.

 

[mt terry d]

IF you build, only build what you need. Which will be about a third or fourth of what you want.

 

[Svivian]

Every situations different but here’s a quick breakdown of how I think about it, and why I do not believe a personal residence is an asset. I choose to own because it has lots of other benefits to me, but in this market I would be better off renting and putting the rest of the money into investments. Don’t want to derail too much, but the math is good to just see how the current mortgage/loan rates affect it.

Between purchase and sale: 6% home value for realtors
Property tax: 1% per year
Insurance 1% per year
Maintenance 1% per year
Mortgage 8% per year

If I live in that home for 8 years then sell. I’ve darn near paid 100% of the home value in “fees”. That’s not equity. And many of those “fees” track with the value increase of the house.

Now of course this changes based on local rates, how much I put down, etc. but the math is still roughly the same.

except you are not factoring in appreciation. Everyone said a recession was coming in 2019 and 2020. I bought my home in 2020 and it is now worth $150,000 more than when I bought it. There are very few instances in history where property values declined greatly. 2008 being the only real mentionable one.

 

[TandKHunting]

except you are not factoring in appreciation. Everyone said a recession was coming in 2019 and 2020. I bought my home in 2020 and it is now worth $150,000 more than when I bought it. There are very few instances in history where property values declined greatly. 2008 being the only real mentionable one.

Bingo!

 

[TandKHunting]

Every situations different but here’s a quick breakdown of how I think about it, and why I do not believe a personal residence is an asset. I choose to own because it has lots of other benefits to me, but in this market I would be better off renting and putting the rest of the money into investments. Don’t want to derail too much, but the math is good to just see how the current mortgage/loan rates affect it.

Between purchase and sale: 6% home value for realtors
Property tax: 1% per year
Insurance 1% per year
Maintenance 1% per year
Mortgage 8% per year

If I live in that home for 8 years then sell. I’ve darn near paid 100% of the home value in “fees”. That’s not equity. And many of those “fees” track with the value increase of the house.

Now of course this changes based on local rates, how much I put down, etc. but the math is still roughly the same.

I disagree with renting, instead of making a mortgage payment, no matter how the economy looks. Ya lost me there.