Satellite Beach, FL -- (SBWIRE) -- 08/03/2012 -- For the past several years, there has been a lot of doom and gloom surrounding the real estate market. Home building has been down in many markets across the country, and home values have also fallen steadily in several areas.
According to DiPrima Custom Homes, a company that serves the Brevard County, Florida area, there is definitely a silver lining to home prices hitting rock bottom: the lower prices mean that this is an ideal time to purchase a new home. For people who are wondering about purchasing new homes Melbourne FL area DiPrima Custom Homes has written an article that details why and how this may be the perfect time to do it.
As the article explained, one reason this is the case is due to super low interest rates. Many financial experts agree that interest rates will not get much lower than they are today. In fact, as home builder Florida DiPrima Custom Homes noted, the scenario that most lenders would agree to is that the window of opportunity to get a 30 year mortgage on a home at 4% or less will close in the next year to 18 months.
“The fact that interest rates have remained at rates not seen since the post war baby boom is a direct result of the current monetary government policy to keep rates low during this recession,” the article explained, adding that these low rates should encourage borrowing as well as reducing the interest the Federal Government has to pay on its borrowings.”
In addition, the cost of buying a new home is much lower in comparison to the “housing boom” prices that existed in 2006. As the Viera Florida homes experts noted, several factors contributed to the way homes were priced during the period from 2004 to 2006.
For example, lenders were anxious to make loans based on appraisals that were going up every month. But that rate of inflation in home prices was both unsustainable and unrealistic.
“A second reason for the increased cost of housing was that builders had to pay more to purchase developed lots and to develop raw land,” the custom homes Melbourne FL company noted.
“This situation was caused by the normal influence of supply and demand. In addition, builders had to pay higher prices for raw materials like lumber, drywall, copper, steel and concrete.”
Fast forward to today, and prices for new homes have come down by 20 to 35 percent in most locations. Land values are also down, and the availability of most building materials is steady and competitively priced.
Because the real estate market is softer than it was during the recent boom, builders are also working on lower profit margins to encourage home sales.
But what about home owners who would like to buy a new house, but are living in a home that they bought several years ago that has dropped by 30 percent or more of its market value? Many of these people would like to sell their homes and buy a new one, but are waiting for the prices to get back to where they were when they bought.
According to the article by DiPrima Custom Homes, this logic needs to be analyzed further. Assuming that the housing market has bottomed out and prices are moving higher, if home prices resume their normal rate of appreciation of 3 to 5 percent a year it would take 7 years or more to break even.
During that period of time, the article noted, the cost of new homes will certainly increase by an equal or greater percentage and interest rates will almost certainly be significantly higher.
The bottom line is, the national housing market may take many years to recover. It’s a buyer’s market, but homeowners looking to sell their homes and move to a new home need to do the math.
About DiPrima Custom Homes
For the past 50 years, DiPrima Custom Homes has served Brevard County Florida custom home buyers and those who are seeking to renovate or add to their existing homes. Over the years, the DiPrima name has become synonymous with integrity, competence and quality. This recognition stems from a devotion to the objective of providing the most value for the buyer's investment. For more information, please visit http://diprima.com