Home Building Hurdles and Construction loan Declines
The financial crisis is affecting everyone. People are losing their jobs and some have to foreclose their homes. As a result, there is a decline in home building making some doubt that now is now the right time to build a home. [I:0:T]
When you have built your home, one thing you have to deal with is the property taxes and this could range from $1,000 to $10,000 depending on where you live. Take note that this does not yet include mortgage expenses if you have not paid yet for the house in full. The only consolation is that you pay for this on a fixed term.
While most home values go up after how many years, in some cases like during the financial crisis, its value could go down. Some analyst said that the average home value has only kept up with inflation over the last few decades so you dont really gain that much.
A good example is the state of California which lost more than 220,000 jobs in the past 2 years. This translates to a loss of about $30 billion to the states economy. Some companies have gone bankrupt with others forced to close down their projects.
You will also have to include inflation because building a home increase from 3% to 6% annually. With this information, only look at homes that were built within the last 6 months.
Since the property of most homes has also gone down, many of the current homeowners cant even make a profit if they decide to sell it now in hopes of building a new one.
For those who are renting, continue paying for it because it is cheaper to own until perhaps you have save enough to consider building your own home. In most places, annual rent is still less than 3% of the purchase price and mortgage rates are 6.5% which makes it cost more than double to try and borrow money to build a home.
If you signed a warranty with your contractor, any problems will be taken cared of by them without any additional charges.
Since your house is new, it is more energy efficient compared to older homes thanks to new technology and you are compliant with new environmental regulations.
If you had this property for a long time, then chances are the neighborhood around you is already well developed. You dont have to haul a lot of dirt, do grading, clear trees or blast through large rocks if your property happens to be somewhat secluded.
There are bargains to be found out there in the real estate marketplace but make sure you pick the best projects in the best areas.
We mentioned earlier that the second reason for the decline in home building is that people are not earning enough to buy a home. This is true for new families especially those who have children because its hard to do both when you already have children.
What makes matter worse is that banks who happily loaned money to homeowners sold this to companies like Fannie Mae or to buyers of mortgage backed bonds. As a result, the value of most homes is now falling so you will have a hard time making a profit if you decide to sell your home.
When you have built your home, one thing you have to deal with is the property taxes and this could range from $1,000 to $10,000 depending on where you live. Take note that this does not yet include mortgage expenses if you have not paid yet for the house in full. The only consolation is that you pay for this on a fixed term.
While most home values go up after how many years, in some cases like during the financial crisis, its value could go down. Some analyst said that the average home value has only kept up with inflation over the last few decades so you dont really gain that much.
A good example is the state of California which lost more than 220,000 jobs in the past 2 years. This translates to a loss of about $30 billion to the states economy. Some companies have gone bankrupt with others forced to close down their projects.
You will also have to include inflation because building a home increase from 3% to 6% annually. With this information, only look at homes that were built within the last 6 months.
Since the property of most homes has also gone down, many of the current homeowners cant even make a profit if they decide to sell it now in hopes of building a new one.
For those who are renting, continue paying for it because it is cheaper to own until perhaps you have save enough to consider building your own home. In most places, annual rent is still less than 3% of the purchase price and mortgage rates are 6.5% which makes it cost more than double to try and borrow money to build a home.
If you signed a warranty with your contractor, any problems will be taken cared of by them without any additional charges.
Since your house is new, it is more energy efficient compared to older homes thanks to new technology and you are compliant with new environmental regulations.
If you had this property for a long time, then chances are the neighborhood around you is already well developed. You dont have to haul a lot of dirt, do grading, clear trees or blast through large rocks if your property happens to be somewhat secluded.
There are bargains to be found out there in the real estate marketplace but make sure you pick the best projects in the best areas.
We mentioned earlier that the second reason for the decline in home building is that people are not earning enough to buy a home. This is true for new families especially those who have children because its hard to do both when you already have children.
What makes matter worse is that banks who happily loaned money to homeowners sold this to companies like Fannie Mae or to buyers of mortgage backed bonds. As a result, the value of most homes is now falling so you will have a hard time making a profit if you decide to sell your home.
About the Author:
If your looking for a construction loan to build your new home and want new ideas on home Building, or just Building a new home download a free construction loan e-book on our website.
posted by Credit Counseling at
5:09 PM
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