So, as illogical as it may feel, now is actually a good time to buy home… and an even better time to build new.
Our natural instincts are to pull back from large investments when the rest of the economy seems so shaky. It makes sense to feel uncertain right now. It also makes sense to want to protect your finances and spend money wisely.
… But when does it NOT make sense to spend your money wisely?
If you’re in a position to be able to afford to spend foolishly, good on you! We’ll happily build you the lavish home of your dreams. But for the rest of our customers, we’re here to sell you a home that fits your needs and your budget. Otherwise, word would get out that we’re terrible people who are only in it for the profit, and we’d be out of business real quick.
We’ve made several COVID-related changes to the way we’re doing business here at Verity Homes, but we will never abandon our three core values… one of which is “Find the Win 4X.” It means we’re not going to sell you something that’s not the right fit for you, your family or your budget. It’s a promise we make, and we back it up with our Peace of Mind Guarantee.
Why Now is a Great Time to Buy/Build
Back to the question at hand. I asked a couple people plugged into both the Fargo-Moorhead market and the Bismarck-Mandan markets to help us understand the opportunities that are out there — Joel Schneeberger, Director of Sales at Brandenburg Crew Inc. of eXp Realty; and Kenneth Watkins, New Home Specialist for Verity Homes and Trademark Realty Agent.
Q: What are you seeing in the current market? Are homes selling? Are people buying?
Considering how strange everything feels right now, I like to compare what we saw last year to what we’re seeing now. If we look at April, for example, in the Fargo area we saw about 35% fewer homes go on the market this year than we did last April. So we have less selection right now for buyers, and we’re seeing quite a lot of competition as a result. The number of homes coming on the market is about equal to the number of homes selling, so as soon as homes are put up for sale, they’re being sold quite quickly. That means sellers who are ready to make a move are getting top dollar for their homes and selling their homes relatively easily.
Here in the Bismarck-Mandan area, I’m seeing the same trends that Joel is in Fargo. We don’t have an abundance of homes on the market, which means buyers are having to move quickly if they find something that they like. The number of active listings on the MLS is actually trending down, while the number of contracts is going up… so it seems as though there are more buyers out there right now than sellers. For people living in newer homes, their equity is also appreciating faster than normal, so their homes are rising in value faster than we would have anticipated. It’s a good time to be in a new construction home purely from an equity perspective.
Q: What are the benefits of building a new home right now?
Because used homes are selling so quickly right now and there isn’t a ton of homes on the market right now to pick from, a lot of buyers simply aren’t finding what they’re wanting. And if they do, it’s sold so quickly they may not be comfortable making a quick decision on putting in an offer. So for many of the buyers we’re working with right now, I am really encouraging them to consider building… they’ll get exactly what they want, they won’t feel rushed and by and large they’ll spend about the same to get that perfect home as they would spend on a used home they might feel like they had to settle on.
Prices are going up for used homes because of the limited supply. There are more buyers out there right now than sellers, so like Joel said we here at Verity Homes can build you a home that fits your needs and your budget and it’s going to be in a location with new infrastructure, new roads, new schools, new shopping centers… it’s going to be in a location where your home is going to build equity for you faster than a used home. And, again, you get exactly what you want. You get to pick everything out and spend your money on the things you want versus having to feel rushed into buying a used home that just isn’t quite perfect.
Q: Who’s in the best position right now, buyers or seller?
If you’re at a point in life where you’re ready to maybe move up from your first home, maybe you want something with more space and a few more creature comforts — things you can pick out when you build new — you are in the best position possible. You’ve got a home that will list for around $175-250,000 that will easily sell, and you’ve got historically low interest rates to then turn around and finance your dream home. And look, we’re all living with this pandemic and many of us are spending way more time at home than normal. Now’s the time to look at your living situation and consider whether or not you’d rather be living in something newer, nicer, bigger.
Honestly, it’s both. Sellers are probably getting more for their used homes than they would’ve expected, and buyers are taking advantage of these crazy low interest rates. I’ve been in this industry a long time, and I’ve worked in the financing side as well, I just never thought we’d see rates bouncing around this low.
Q: What’s your advice for first-time buyers?
If you’re not going to build a new home with someone like Verity, just be prepared to act quickly. That means knowing what you want and how much you can (and can’t) spend. Make a checklist of what’s most important, so when you go tour a home you can easily determine if it checks off enough of your boxes. Working with a team like we have here at Brandenburg Crew Inc. of eXp Realty, you will have the advantage of multiple people helping you keep an eye on new listings and making sure you don’t miss your dream home when it hits the market. Right now things are moving so quickly it really is to your advantage to have a full time expert working for you.
Whether I’m representing Verity Homes or Trademark Realty, I always tell first-time buyers to get pre-approved before getting too far into the home search itself. You gotta know your budget so you keep yourself out of trouble. And even when I’m working with more experienced buyers, helping them build a new, bigger home or a no-steps patio home for retirement, we always start with establishing a budget. With rates as low as they are, I’m anticipating that lenders will be busier than normal, so the sooner you meet with your bank the better.
Q: What’s your outlook for the coming months?
I feel like the uneasiness will continue, but honestly I don’t see much of a slowdown in the housing market. Our market is nothing like the average market you hear about on the nightly news. In 2008 and 2009 our market continued to perform well, so history tells us there is no need to worry. Many experts are pointing out that home values will be rising sharply over the next few years due to the monetary policies we see now. This falls in line with the local trends we are seeing too; that home values are due to start rising. With the shelter in place mandates being lifted, I’d expect to see many more people in the market to sell and buy. It will be a busy summer for sure!
I know it’s cliche, but cliches tend to be true: prices will always go up. I think a lot of younger buyers may be waiting out for some big price drop or for the housing market to crash, but I don’t see it happening and our history here in North Dakota would back that up. The nature of economics is prices go up — it’s why real estate is historically one of the best investments you can make. With rates so low right now, I would encourage folks who are feeling the itch to make a move to start getting serious. The home you buy or build this year is almost always going to cost you less than it would 12 months from now.