Southampton – As a veteran home builder in the Hamptons, I’m often asked, “Is it a good time to build?” As a builder, I don’t think there’s necessarily a “bad” time to build. But let’s face it, your family’s needs and disposable income don’t always coincide with low housing costs, low interest rates and low labor costs, like we are experiencing now.
With that said, the Hamptons are unique. Especially with regard to real estate; some areas have seen reductions in price, while other areas are stable and yet other areas have seen increases. However, as a whole I think everyone would agree that prices are down. Combine that with the surplus of inventory and you have a buyer’s market. In addition to prices being lower, banks are lending at record low rates. Yes, they require a bit more documentation to underwrite loans but the rates are the best we may ever see them. Warren buffet recently stated that it is a great time to buy real estate. He stated, “It’s a way, in effect, to short the dollar”, by capitalizing on mortgage rates, specifically a 30 year fixed mortgage and “If (you) know where (you) want to live the next five or 10 years… it’s a terrific deal.”
In addition to low real estate prices and the extremely low interest rates, you can benefit greatly from low labor rates. I’ve seen construction costs go down as much as 20% or more, over the last three and a half years. Specialty contractors don’t have the work load they once had so they’ve been forced to lower their prices and compete for their share of the market. And builders have become more sensitive to their clients’ request to create value. In today’s economy, a sophisticated builder understands that costs are just as important as quality. Let’s face it, there’s less work out there than there was 4 years ago and builders that are in tune to their clients and continue to be successful have made cutting costs (without sacrificing quality) part of their repertoire.
So, is it a good time to build? I think it is. The question is, “Is it the right time for you?”