Buy Low, Sell High Still Works
The crisis of the current US housing market is being watched closely around the world. Beyond the endlessly repeated generalities of despair appearing in most headlines, closer observation will reveal some interesting facts which may be useful:
The slow down affecting some part of the country more than others; in fact, some areas are doing well.
Multi-family housing has not been hit as severely as single family.
The existing home market operates somewhat differently than the new home market; houses can simply be pulled off market and held until later so that sellers are not forced to take a loss.
Many economists are predicting the overall market will level off and begin to recover in 2008. The single family sector will not jump back up to the high levels of 2005 but will return to a normal growth patterns after the “overhang ” or excess inventory of housing is dissipated.
So where are opportunities over the next 12 18 months?
With housing sales moving slowly, there is increased opportunity for the custom home market. Homeowners not having to rely on the sale of a current home to begin on their dream home are not adversely affected by slow housing sales. In fact, they stand to save time and money by moving ahead while the existing supply of homes has yet to be absorbed, a window estimated to be one year or perhaps a yearand-a-half.
“We are getting more calls from custom home customers than usual, and because of general market slowdowns, our builder partners are offering very competitive pricing structures. A year ago we might have asked for bids from five builders on a project, and because they were all so busy, we might have gotten only three to respond; now it is 100%,” said Brad Shapiro, principal of Shapiro & Company Architects.
He elaborated that savings were to be had now on builders’ fees, subcontractors’ fee, and even building materials. “You won’t get a house for half price but you may be able to add some finer finishes for the same money or perhaps increase size somewhat,” Shapiro explained.
In a recent Commercial Appeal article regarding the sales of penthouse units in the One Beale highrise, the idea is reinforced. The high-end condos are moving quickly “like high-end retailers and brands that survive and thrive during economic slow times because of the buying power of their customers.”
With customers more likely to be able to get their choice of builders and to get competitive fees, now is the right time to move forward. “It’s about timing,” said Shapiro, “and a better time than right now would be hard to imagine.”