Mortgage interest records are at record low levels. In fact few people today can remember mortgage rates this low! Only recently, rates on a 30 year mortgage fell below 4%. If you financed a $500,000 mortgage with a 30 year loan in 2007 your payment would have been around $3,500 per month. Today, that same mortgage would be around $2,400 or about a third less expensive.
A few home builders and developers have the survived the great recession and are well poised to grow and prosper in 2013 and beyond. The marginal builders, the overextended, the inefficient and the reckless have been wiped away in the most difficult housing market in 75 years. The survivors made it by reducing overhead, eliminating waste and re-engineering their products that value and affordability have been improved. The bottom line is that home buyers can expect more size and features for their hard earned dollars; and they can also expect homes less costly to heat, cool and maintain.
Inflation is on the horizon! In early January 2012, we saw a 33% increase in sheetrock. This was the biggest increase in price for building materials in five years. Many other material suppliers have followed suit and increased their prices this year as well. Inflation has already impacted grocery stores and the gas station and continues to affect home building as well.
On the surface it appears that new home prices have done nothing but go higher and higher since the 1980's. The truth is however that much of the increase in new homes is the demand for better performing (more expensive) products like granite countertops, or stainless steel appliances to name a few. Likewise, the additional requirements demanded by new building codes have made homes safer, more energy efficient and more structurally sound. Enhanced building codes, more inspections and increased environmental regulations always result in better homes but unfortunately more expensive homes.