Last Sunday, I visited an Epcon Model Home with one of my clients. When we were finished with the “dog-and-pony” show the sales rep said: “Don’t wait too long. Our base price will go up by $10,000 tomorrow.”
That’s not the first time I heard this warning. As a matter of fact, new home prices have increased between $10,000 and $20,000 every couple of months.
Are builders taking advantage of desperate buyers in this low inventory market?
Or, are there other reasons?
Here’s why prices of new builds have been going up …
Lack of Land to Build On
It has become increasingly hard for builders to find large properties to develop a new subdivision or patio home community of 100+ homes.
They may have to resort to buying large lots with existing buildings, tear them down, and completely redevelop the area with a denser footprint.
Spike in Lumber Prices
The price of framing lumber has increased by 130% since April.
The National Association of Home Builders (NAHB) estimates that the average new home price is $16,000 higher due to the cost of lumber.
Strong Buyer Demand
We were not the only ones crowding the sales rep at the Epcon model last week. Patio homes are super popular with the over-55 crowd, with empty nesters, and retired couples moving closer to their grandchildren.
In Dublin alone, Epcon sold all 61 homes in the Courtyards at Muirfield Ridge within 3 years at an average price of $450,000. Their new Riverside development (along Riverside Drive just south of Bridge Park in Dublin) which features 81 building sites is almost sold out, too.
Riverside is so popular that Epcon purchased 2 neighboring properties to double the size of this development. The average sale price of a patio home at Riverside is $550,000 (with options).
Why Can Buyers Afford These High Prices?
First of all, interest rates are at 3%. So, the monthly payment on a $400,000 mortgage would be only $1,686 per month. This does not include Dublin’s property taxes, insurance or condo fees.
Many buyers take advantage of HECM loans. These are government guaranteed, reverse mortgages. Older buyers can purchase a $550,000 home for a cash down payment of $300,000 and never make another mortgage payment for the rest of their lives.
If you have any thoughts of buying or selling this fall, click here to schedule a FREE Zoom Consultation or Call or Text me at (614) 975-9650!
Susanne Novak has been a Realtor since 2007. She is the broker and owner of RE/MAX 24/7 in the Dublin Historic District. Susanne typically helps 50-60 families each year with their real estate needs. She's your trusted advisor when you search for your dream home, and a skilled negotiator when she lists your property to get top dollar when you sell.