topic Re: new construction rapid price increases in Mortgage Loans

new construction rapid price increases

Lynnow — Fri, 25 Dec 2020 02:48:18 GMT

We are in a waitlist for a new construction, with the next phase coming out in January. When we went into their office at the end of November the price was quoted to be estimated at 597k in January. However, I'm looking at new construction homes with bigger, more well known builders and some are starting around 650k at this time (those homes are a little bigger & the neighborhood is a little fancier) but do you think there will be a dramatic increase in the price that we were quoted in November, even though we are going with smaller builder? Has this happened to anyone? House prices are going up so fast! I see some builders have raised their prices 20k in one month but at the same time other builders have been lowering their prices 5-15k (which brings the beginning price from 545-590 for around the same sized house we are interested in). This is all happening within a 2 mile radius so I'm not sure what to expect.

Also, has anyone been able to negotiate upgrades in this tough market?

Merry Christmas

Re: new construction rapid price increases

newmomnewme — Fri, 25 Dec 2020 04:20:39 GMT

@Lynnow I am going through the EXACT same thing! I'm looking at all new builds, I gave up on resales when I got beat out on every house I even took a peek at.

The house I want from a smaller builder in August started at 339k...I figured I would end up paying closer to 375k. Now that same model starts at 365k. Looks like they are planning their last phase for Spring 21. The Ryan Homes community offers the same starting price for a smaller house 😒.

A few weeks ago, the builder that I really like (their base has a few upgrades yay!) added floor plans to their site for a new community a few miles from the other two communities. Guess what? They didn't list prices UGH!!!

For what it's worth, Im on their VIP list so I emailed them to ask about price ranges and time for completion etc. I got an out of office for the holidays message....so now I am just going to wait, but I fear their starting prices are going to be closer to my max (420k). I need a lot large enough to add a pool. The pool is non-negotiable.

I was hoping to snag a deal during the holidays since I was told by my realtor that prices would drop a little December - January. Honestly, I don't think prices are going to go down until the interest rates go back up.

It's a sellers market, but I think we might be able to get a few freebies if we buy during the first phase. This is a crazy market...we just have to do our research and make the best decision possible. Sorry for the long winded response...short answer is this:

What you are experiencing is happening everywhere. Make your list of non-negotiables and go get your new house! I look forward to reading your "we got our keys" post.

Happy Holidays to you and yours.

Re: new construction rapid price increases

peter1974 — Fri, 25 Dec 2020 07:53:10 GMT

To give you an idea what we experienced:

We signed a contract on a new build in April (closing next week), on a house with a list price of $335K. With upgrades it comes to $345K. We were able to negotiate a few small things but only because it was a new floor plan for them.

The same builder just started a new phase of our neighborhood, which will start selling in January. They had prices listed for our same floor plan now starting at $399K. They eventually took down the prices because I assume they will have to raise them again.

Oh, and our house appraised a few weeks ago for $369K.

So yeah, it's nuts. We were originally second guessing about pulling the trigger so quickly without looking around much, but we are now so glad we did.

Re: new construction rapid price increases

Lynnow — Fri, 25 Dec 2020 17:32:38 GMT

Awww thank you for your kind words

Uggh I hate when they dont list the prices too!! Lol yeah I'm guessing a lot of ppl are going to new construction instead of risking being outbid on homes and I guess that's why the prices for new construction are rising so fast. Sucks for us lol

I also don't see prices dropping anytime soon. I see no evidence of the market slowing down at all. There does seem to be less inventory in my area but that only drives the prices higher. And for some reason people are paying about the same price for a house built in 1999 that they would pay for a new construction. I guess some people are not patient enough to wait for the new homes to be built lol

I hope you are able to buy at a reasonable price and I hope you get some good freebies!!

Re: new construction rapid price increases

peter1974 — Fri, 25 Dec 2020 17:51:32 GMT

@Lynnow wrote:
Awww thank you for your kind words

Uggh I hate when they dont list the prices too!! Lol yeah I'm guessing a lot of ppl are going to new construction instead of risking being outbid on homes and I guess that's why the prices for new construction are rising so fast. Sucks for us lol

I also don't see prices dropping anytime soon. I see no evidence of the market slowing down at all. There does seem to be less inventory in my area but that only drives the prices higher. And for some reason people are paying about the same price for a house built in 1999 that they would pay for a new construction. I guess some people are not patient enough to wait for the new homes to be built lol

I hope you are able to buy at a reasonable price and I hope you get some good freebies!!

Thanks. Yes we are locked in at the price we signed the contract for back in April. We got in right before the first price jump. Our floor plan had only been around since January this year.

We got a few free things but only because the builder realized that the plan should include them. The bigger upgrades they didn't budge on.

Sounds like we are in similar markets. Merry Christmas!

Re: new construction rapid price increases

Lynnow — Fri, 25 Dec 2020 17:58:07 GMT

Oh wow. Well I'm glad you were able to negotiate something. Every little bit helps. If we started looking in April we would've been in much better shape but we are looking now bc my husband got a new job in a different area.

In November we got of quote of 597k but it would've been 505k in April. And I'm afraid in January they will price it even higher. I'm not sure if they'd raise it much more than the estimated quote they were giving ppl in November/early December for the next phase but I wouldn't put it past them. So many ppl are looking I'm sure they'd still sell out in a week or so.

I'm glad everything worked out for you! Sounds like you had good timing. And you're right, it's nuts out there!!

Re: new construction rapid price increases

chiefone4u — Fri, 25 Dec 2020 18:17:29 GMT

@Lynnow wrote:
We are in a waitlist for a new construction, with the next phase coming out in January. When we went into their office at the end of November the price was quoted to be estimated at 597k in January. However, I'm looking at new construction homes with bigger, more well known builders and some are starting around 650k at this time (those homes are a little bigger & the neighborhood is a little fancier) but do you think there will be a dramatic increase in the price that we were quoted in November, even though we are going with smaller builder? Has this happened to anyone? House prices are going up so fast! I see some builders have raised their prices 20k in one month but at the same time other builders have been lowering their prices 5-15k (which brings the beginning price from 545-590 for around the same sized house we are interested in). This is all happening within a 2 mile radius so I'm not sure what to expect.

Also, has anyone been able to negotiate upgrades in this tough market?

Merry Christmas

Unfortunately the price changes most everyone is seeing has to do with lumber wholesale prices.

In February 2020 wholesale lumber was $20 per 1,000 board feet here in Idaho. In August 2020 the price had climbed to $1,200 per 1,000 board feet.

The first week of December prices had fallen back to $800 per 1,000 board feet.

As you can easily see, cost of materials has sky rocketed. Globally, there are places that prices haven't fluctuated as much but their supply is limited.

Several of the lumber mills I deal with daily are expecting prices to drop to around $200 per 1,000 board feet around April 2021 so long as the country doesn't return to lock-down. If the country moves into another stay at home order prices could reach more than $2,000 per 1,000 board feet.

Hope everyone is having a wonderful holiday season.

Merry Christmas!

Re: new construction rapid price increases

Lynnow — Fri, 25 Dec 2020 18:39:40 GMT

Wow!! Never even thought of things like that. It makes sense but wow what a price hike!!!

Re: new construction rapid price increases

chiefone4u — Fri, 25 Dec 2020 18:53:36 GMT

@Lynnow wrote:
Wow!! Never even thought of things like that. It makes sense but wow what a price hike!!!

Part of the price hike came from people staying home completing projects during the stay at home order, creating more demand. The other end of the price hike came from reduced supply.

The lumber mills that shipped waste wood to paper mills were deemed essential and were allowed to continue to produce as well as their supply chain (loggers and trucks). While most lumber mills that didn't ship waste wood to a paper mill were not deemed essential and stopped production reducing supply availability.

When supply and demand even out again prices will become more reasonable, though I don't see the mills ever letting prices return to $20 a thousand after the increase in costs and the public showing they were willing to pay the higher rates.

Re: new construction rapid price increases

newmomnewme — Fri, 25 Dec 2020 19:08:51 GMT

@chiefone4u Thank you for the insight. I really appreciate it. I really want to buy during the first phase of possible

I wish they would just post the prices so I can decide and create my plan for success.

Merry Christmas! Wishing all of you a happy and safe holiday!!

Re: new construction rapid price increases

CA4Closure — Mon, 28 Dec 2020 18:08:26 GMT

If your community is in a highly sought after neighborhood, the builder should have priced their homes accordingly. Back in the early 1990s when S. California had lot of new construction going on, builders priced their homes outrageously but people still bought. My first new home I bought in 1993 was listed by the builder at $259,000. It was the biggest plan and property. Back then the average price of a home was around $230,000. By the time the model homes were up, the properties were sold when they were just dirt pads.

I never seen any reputable builder increase their prices once development began unless that builder was on shaky financial grounds and he needed cash infusion to finish the project.

Re: new construction rapid price increases

newmomnewme — Thu, 14 Jan 2021 00:52:56 GMT

@peter1974 @chiefone4u @Lynnow @CA4Closure Hey guys...my preferred builder listed their prices base $480k for the floor plan I want. That's about $60k more than I am willing to pay. They are going to raise the prices with every two sales!!! Can you imagine what the prices will be in summer?!? Yikes!

The sales rep called today in response to my email and I told him the price was too high. He said ok and wished me well. 😥

I feel like I am not going to be able to purchase a home until next year. After I already applied for the new school district and prepped my credit file for the mortgage app process.

The wind is officially gone from my sails and I'm gonna take a credit break for a couple months. Just figured I would give an update here since we were just discussing the possibilities.

Re: new construction rapid price increases

Lynnow — Thu, 14 Jan 2021 01:13:39 GMT

Wow! That is crazy. I'm sorry I can't imagine. I would be up in arms, feeling defeated as well.

We were quoted 597 and last Saturday they listed the price as 604.9. I guess I can live w that. I actually thought it would be about 615. They sold out of all available homes in the new phase within 3 hours. The market is insane right now. And what's even more insane is that many of the people in the office buying homes were paying cash. These ppl were my age (mid 30s) and I have never been so jealous in my life lol

I hope a better deal comes your way.

Re: new construction rapid price increases

peter1974 — Thu, 14 Jan 2021 03:15:44 GMT

@newmomnewme wrote:
@peter1974 @chiefone4u @Lynnow @CA4Closure Hey guys...my preferred builder listed their prices base $480k for the floor plan I want. That's about $60k more than I am willing to pay. They are going to raise the prices with every two sales!!! Can you imagine what the prices will be in summer?!? Yikes!

The sales rep called today in response to my email and I told him the price was too high. He said ok and wished me well. 😥

I feel like I am not going to be able to purchase a home until next year. After I already applied for the new school district and prepped my credit file for the mortgage app process.

The wind is officially gone from my sails and I'm gonna take a credit break for a couple months. Just figured I would give an update here since we were just discussing the possibilities.

Wow, what region of the country are you in if you don't mind me asking?

Re: new construction rapid price increases

chiefone4u — Thu, 14 Jan 2021 03:39:57 GMT

@newmomnewme wrote:
@peter1974 @chiefone4u @Lynnow @CA4Closure Hey guys...my preferred builder listed their prices base $480k for the floor plan I want. That's about $60k more than I am willing to pay. They are going to raise the prices with every two sales!!! Can you imagine what the prices will be in summer?!? Yikes!

The sales rep called today in response to my email and I told him the price was too high. He said ok and wished me well. 😥

I feel like I am not going to be able to purchase a home until next year. After I already applied for the new school district and prepped my credit file for the mortgage app process.

The wind is officially gone from my sails and I'm gonna take a credit break for a couple months. Just figured I would give an update here since we were just discussing the possibilities.

Sorry to hear they priced you out of the home you wanted. Hopefully a much better option/home presents itself to you in a timely fashion.

Re: new construction rapid price increases

newmomnewme — Thu, 14 Jan 2021 03:57:26 GMT

Thanks guys. I'm trying to keep my head up and I really do want to take advantage of the low rates....but I will not purchase a home I can't afford or a home that doesn't meet our needs... But oh the butler's pantry and the .5 acre lot almost convinced me that it was worth it. I'm gonna stay strong. Who knows, maybe it's for the best. I'll have more time to pay ALL of my cc down and watch my INQ age off. There has got to be a bright side!

Re: new construction rapid price increases

newmomnewme — Thu, 14 Jan 2021 14:16:34 GMT

@peter1974 I am looking in the northern Delaware suburbs. Many folks retire here...no state tax and close to beaches.

Re: new construction rapid price increases

susantrexel — Sat, 16 Jan 2021 07:01:56 GMT

I went on a waitlist for a new build in the summer. Got off the wait list and approved for the 2nd phase and already the model I wanted had went up 7k.

Re: new construction rapid price increases

Anonymous — Sat, 16 Jan 2021 20:28:51 GMT

In Colorado, we signed September 2020 for a new build. At that time, the base price was $452,950. As of today, the base price for that same model is now $507,950 😳 Pretty crazy out here

Re: new construction rapid price increases

Lynnow — Sat, 16 Jan 2021 22:59:12 GMT

Wow!! Glad you got in when you did.