Should I build a custom house in 2023? Only 19% of consumers believe that 2023 will be a good time to build a custom home, according to the Housing Sentiment Index. This is because interest rates are higher than ever before, with many expecting a recession in the future. If you are asking yourself this question, you may have already started the planning process. One of the first reasons is that construction costs have begun to drop. When the pandemic first began, everyone was seeing increases of up to 32%. But now, the pace of the increases has already begun to significantly slow down. It is expected that construction costs will begin to increase at a more consistent pace, between 2% and 4% in the year 2023.
Is 2023 a Good Time To Build a Custom Home?
Here are several more reasons to move on with your plans. In the year 2023, you can count on resale values to remain steady. Besides the market crash in 2008, many homeowners have rates under 5% versus variable rates that they were unable to afford. The low level of housing supply that is being seen now will still remain present without any reductions in value.
Besides the resale value, there is not a lot of competition when it comes to finding land. Over the past years, it has been a challenge for people to find available land to build their homes on. But, this is no longer the case, which means stability is finally present in the land market.
Another reason 2023 is a good time to build your home is that interest rates are more likely to decline. The mortgage market has already begun making predictions about falling rates. When it comes to mortgages, many people either sell their homes or refinance their loan before their loan ends. The lenders make money between the rate you are being charged and the fed funds. Currently, the spread on mortgages is much higher than it has ever been only because it is expected that many newly originated loans will be refinanced when rates start to decrease.
Not only will interest rates decline, but the supply chain has also begun improving. Now you no longer have to wait 12 months just to receive appliances and garage doors. Over the past several years, waiting for appliances has been the new norm. More than half of the builder materials dealers stated that the supply chain has improved and is expected to remain stable.