By Dan Green, Principal of Brookfield Communities
Recently, Federal Reserve Chair Janet Yellen affirmed the Fed’s plans to increase interest rates later this year. What does this mean for homebuyers? It strongly signals that the Summer of 2015 is a new homebuyer’s dream. Specifically, it’s a “Perfect Storm” of incredibly low mortgage interest rates AND the lowest possible construction costs. It has given rise to the best new-home buying opportunity in the past fifty years!
In terms of current mortgage interest rates, the current rates of less than 4.5% are historically low. As an example, Sally, my much older sister (she hates it when I use this description), purchased a brand new home in a suburb of Pittsburgh in June of 1964. At that time, her three-bedroom, two-bath home, with family room and full basement, cost $25,000 including the lot. She and her husband were delighted to get a mortgage interest rate of 5.25%. It is amazing that the prices of the homes have increased significantly, yet the cost of money, in form of mortgage interest rates, has actually declined!
Furthermore our project construction manager has informed us to prepare for increased construction costs this fall. We are preparing to expect increases in lumber, concrete, and plumbing costs. Unquestionably, this is the time to take advantage of the lowest possible construction costs resulting in the lowest possible prices for a new home.
This Perfect Storm of remarkably low mortgage interest rates, the availability of mortgage loans, the availability of discounts for cash buyers, and the lowest possible costs of building a home, has resulted in the best new home purchase opportunity in decades.
For more information on how you can take advantage of this marvelous opportunity, please give us a call, and our folks will gladly present how advantageous these market conditions are for you.
And finally…if you happen to see my sister, please don’t tell her what I wrote about her.