Time to Make your American Dream Come True
If you are reading this issue of Lehigh Valley Marketplace, chances are you have children in school and you are doing some short-range planning to prepare for the upcoming school year. If you are planning on starting a family or your family is growing, now might also be a good time to consider your long-term housing needs.
In terms of seeking housing, the current market provides some of the best buying opportunities that Lehigh Valley residents haave seen in years. Prices have fallen to pre-housing-boom levels, interest rates are near their lowest levels ever, builders are making deals and the local economy is stabilizing. Job losses have largely subsided and employers locally are beginning to hire again.
There are many benefits to buying a newly constructed home. The customer gets to pick exactly what they want and can design the home to fit their precise needs. Additionally, maintenance is low, new building codes have continually raised the quality of construction versus older homes and operating costs are much lower as a result of significantly higher energy efficiency requirements. New homes also come with significant warranties.
What we have noticed is that the new home inventory for first time buyers and for first time move-up buyers (currently own their first home but want to move to a bigger home) in desirable school districts is rapidly being absorbed and prices have stabilized. Builders that still remain had to cut prices to move inventory in order to pay back banks and there are very few new developments coming down the line as banks are reluctant to lend to residential homebuilders. Prices have already begun to stabilize and within two years, prices for new homes in desirable school districts should be higher than they are today.
There are other challenges facing the first-time home buyer and first-time move-up buyer today. Mortgage lenders have tightened their standards and are requiring higher down payments. Having a higher credit score is becoming increasingly important. However, this is not as bad as it sounds. FHA and USDA programs still allow for very little or no money down with excellent rates. In some cases, home buyers have been able to obtain down payment money from their parents or relatives and most builders will pay for some or all of the closing costs. For those who may not be fortunate enough to obtain a gift or loan from relatives, at times we’ve known buyers to take second jobs to save the necessary funds. In fact, one of our buyers recently told us how she took on a second job as a waitress and in one year had saved enough down money to purchase her first home.
With respect to credit score, we work with lenders who have credit score improvement programs and will tell the buyer exactly what they have to do to improve their credit score. Many times, there are just technicalities or old items on the report that simply have to be rectified for the score to go up. It is surprising how often we can get a customer’s credit score up to required levels within just three or four months on a program.
If you are a move up buyer and have a home to sell, we have seen excellent results for resale on homes valued at $250,000 or below. Many are reluctant to sell at what seem to be lower levels, but you will find that the amount you might have to reduce your sale price is more than offset by the deal you will be getting on the purchase of your new home. Plus, you get the exact lifestyle you desire and much lower operating costs and maintenance. While the numbers certainly matter, buying a new home should be more of a lifestyle and comfort decision and not about how much equity gain you will have on paper in three years. To put your best foot forward, before listing your home, consider hiring a professional stager for a day to make your home look more presentable.
Now is the perfect time to consider buying. The deals will not get any better and waiting for your current home price to move up significantly, or, if you don’t own a home, for values to fall more, is a losing proposition. So get moving.
Rick Koze is the president of Kay Builders, Inc. (kaybuilders.com) a family-owned business based in the Lehigh Valley. A native of the area and an Emmaus High School graduate, Koze holds a B.A. in Economics from Yale University. He has more than 15 years experience working with Fortune 500 companies.
