Residential construction buyers thinking about making the decision to buy and build vs renovate - while interest rates and home prices both continue to favor buyers – should act now.
The double favor for homeowners is a rare occurrence in the history of the housing market, and it is most definitely unable to last forever. Whether you are seeking a Minneapolis home builder to build a luxury Twin Cites home or for a major home renovation, the time has never been more opportune for homeowners.
Destiny Homes finds that people still hold on to the American dream of owning their own home, and a beautiful one. With mortgage rates historically low, many homeowners are deciding it is the right time to build a luxury home. More people have become more wealthy investing in residential real estate over other investments. With a priority on family time, providing a home that is a pleasure to live in, has a great loan to price ratio, and is rising in equity, low interest rates have never been better to spur residential construction.
Residential Construction Up 18,5%
The mood for residential construction is optimistic as we begin 2013: Construction of single-family homes climbed 18.5% in December from the prior year.
Low Interest Rates Prompts Buyers To Begin Building Residential Homes
The Federal Housing Finance Agency (FHFA) today reported that the National Average Contract Mortgage Rate for the Purchase of Previously Occupied Homes by Combined Lenders, used as an index in some adjustable-rate mortgage (ARM) contracts, was 3.56 percent based on loans closed in August. That constitutes a decrease of 0.10 percent from the previous month. In March of 2012, FHFA began calculating interest rates using un-weighted survey data. Interest rates are at all time lows spurring residential construction. The September 27, 2012 Report from S&P Dow Jones Indices Shows Average U.S. Home Prices Return to Levels Last Seen in 2003.
Weighing In On Homebuilders, Highlights of FHFA Mortgage Rate Report are:
* Residential construction initial fees and charges were 1.07 percent of the loan balance in August, up 12 basis points from July.
*Eight percent of the purchase-money mortgage loans originated in August were "no-point" mortgages, down 12 percent from the share in July.
* The average term was 27.5 years in August, unchanged from July.
* The average loan-to-price ratio in August was 75.8 percent, down 0.3 percent from 76.1 percent in July.
* The average loan amount was $256,900 in August, down $2,000 from $258,900 in July.
"The news on home prices in this report confirm recent good news about housing. Single family residential construction starts are well ahead of last year’s pace, existing home sales are up, the inventory of homes for sale is down and foreclosure activity is slowing. All in all, we are more optimistic about housing. Upbeat trends continue. For the third time in a row, all 20 cities and both Composites had monthly gains. Stronger housing numbers are a positive factor for other measures including consumer confidence," said David M. Blitzer, chairman of the Index Committee at S&P Dow Jones Indices
The Residential Construction Report
Investopedia.com defines a housing start as "beginning the foundation of the home itself". Building permits are counted as of when they are granted. The Residential Construction Report, known as "housing starts" on Wall Street, is compiled monthly and produced by the U.S. Census Bureau in partnership with the U.S. Department of Housing and Urban Development (HUD). The data is gathered from surveys of homebuilders nationwide. Three metrics make up the Residential Construction Report:
Residential Construction Of Single-family Permits
New construction building permits, are widely considered to be an indicator of future building activity and the housing sectors strength. The numbers edged down by a slight one percent to a rate of 803,000 units in August following an outstanding surge in the permits in July. Residential construction of single-stroy family home permits remained virtually unchanged at 512,000 units and multifamily permits down 3.0 percent to 291,000 units.
Compass Point Rea search Helps The Residential Construction Sector
"Margins on sales of mortgages have widened by about 50 percent since the Fed’s announcement from the average level this year, which already was elevated," said Kevin Barker, an analyst at Compass Point Research & Trading LLC in Washington. One of Co mn pas Point focuses is the residential construction / housing sector and seeks to help builders and real estate industry professionals benefit from anticipated changes in the industry.
Single-Family Housing Is Key To Economy
At a press conference after the Federal Reserves announcement, Chairman Ben Bernanke said that he’s been attempting to reduce home loan costs because the residential property market is "one of the missing pistons in the engine" of the economic recovery.
Contact Destiny Homes for solid answers to your questions. We are proud of our history as a construction contractor serving Minneapolis and St. Paul communities. Don't be afraid to come up with your own questions to ask us. Call 952-934-5706 to learn about home renovations and remodels.
Download the FHFA Mortgage Rates report September 27, 2012
For an International perspective on the construction industry view here or download The RLB Construction Market Intelligence Report for Q3 2012.
Butch and Liz Sprenger, owners of Destiny Homes Remodeling And Renovation Services Home page: www.destiny-homes.com. Service the entire Twin Cites Metro, from our main office in Deephaven, MN working as home Remodeler and owner of Destiny Homes.