Resale Home Prices will Rise
Maybe sooner than expected. It is all about the numbers, let me expand on this statement.
With the slowdown in the economy, what we have been seeing locally in Charlottesville, and on a national level, is New Construction has been out pacing Resales for the last couple of years. Buyers have been drawn to new, lower cost homes and location has been secondary. This is going to adjust and possibly sooner than one might expect.
The National Association of Home Builders (NAHB), tracks material costs and one thing to watch specifically is the price of lumber. A year ago, in Feb 2012, the random length composite price of lumber was $286. Today, Feb 1, 2013, this cost is $387. This is a $101 increase (+35%) in only a year. Track it yourself here – NAHB Site
The builders have to pass these costs on to the consumer or they will not be in business long. So the cost of new construction will rise (it has already started). With this rise, buyers will readjust and look to buying older homes and remodeling. Clients often tell me they watch HGTV and the before and after shows are certainly captivating. Remember Norm on This Old House?
A Bold Prediction
Resales in the next 12-24 months will bounce back strongly and location, vs new construction, will again be the number one factor on a buyers list. Watch for Resales of quality homes, in excellent locations, to take over as the most desirable homes bought and sold.