No matter when you enter the market for a new home, there is always a question of whether or not this is the right time to buy. As one of the biggest purchases of our lives, it's natural and common to wonder if we are making the best decision, and at the right time. If we could only see into the future, our questions would be answered!
Economists can use market conditions to peer into their own crystal ball based on their knowledge and experiences, and predict the future, or at least whether or not it appears that this is a good time to buy a home. Right now, economists are suggesting that it's better to buy a new home now rather than later.
Why? Tariffs that have resulted from what's being called a trade war between the U.S. and China have caused prices of construction and remodeling products to spike, including many of the items in new construction homes. Specifically, this includes things like cabinets, tile, flooring, countertops, HVAC equipment, and more.
Tariffs on Canadian wood products are also affecting home prices.
Our Charlotte Division President Mike Conley recently appeared on WSOC to discuss how these increasing costs are affecting home buyers. The impact of these tariffs are being compounded with other rising costs for home builders, including tightening municipal code requirements and skyrocketing labor costs which Conley said are increasing by as much as 12 percent.
WSOC also interviewed Rick Judson, the chair of the Real Estate and Building Industry Coalition in Charlotte, about the impact of the tariffs. He said, “We have about $10 billion worth of product that goes into the homebuilding industry that comes from China.” That's a lot of product being affected.
He suggested that this may cause some builders to scale back. This all comes at a time when home builders are lagging behind the actual demand for new homes, potentially exasperating the situation.
While the news of rising prices for the construction industry can be worrisome, the Federal Reserve announced on August 1 that it's cutting its key interest rate by a quarter of a percentage point. This is quite notable as the Fed has not cut rates in 11 years and this cut was made reportedly as a result of the trade war with China, according to news reports on statements made by Fed Chairman Jerome Powell.
The drop in the rate by the Federal Reserve resulted in a modest mortgage rate decrease, which ultimately may fall a bit more.
Lower interests rates and impending price increases on new construction make the answer clear to the question, "Is now the right time to buy a new home?" You don't even need a crystal ball to see that the answer is "Yes!"
If you agree that now is the time to buy, our team is ready to help and we would love to chat with you about our communities in the Carolinas, Virginia, and Georgia! We build in the Charlotte, Raleigh and in the Triad areas of North Carolina; Charleston, Columbia, and Greenville areas of South Carolina; Richmond, Virginia; and Atlanta, Georgia. Please feel free to call us at 866-551-7995 or email our team!