How is the construction market in the Toledo area?

Hi everyone! The question I’m hearing a lot lately is ‘What’s going on with the new construction?’ So, I wanted to give you an update!

The supply and demand have been off lately. In a free market, though, that balance corrects itself. So that’s why we are starting to see new construction. There’s a shortage of sellable homes right now. Sellers are responding to that by putting their home on the market and builders are watching what’s going on.

Let me give you the greatest tax dodge in America right now! But don’t tell anyone I told you! Become a builder. Build your own house and live in it for three years. After that you can sell it; all your gain, the imputative value of all your labor is all tax free. There are no income taxes!

I have clients who are doing this now and it’s absolutely phenomenal! The greatest way to make money is to build your own home and sell it!

The second thing I wanted to talk about is how the supply and demand is out of wack. You’re not going to see smaller builders building. In the last boom market (7-9 years ago), everyone became a builder. Most of those guys are gone and I don’t think they are coming back.

The Toledo market is interesting because we don’t have big national builders here who take lot after lot. Instead we have a few local large builders. That’s who’s building, not 70 smaller builders.

Here’s how you buy a new house today. For the last six years you had to basically do a contract. Today, there are enough spec houses for you to buy. The other way is kind of cheating; you want to find a transferee who bought a new house and they have been transferred in the first year or two.

So, it’s a tight market. Supply and demand is out of wack and the huge number of builders we had is mostly gone. I ran some statistics and found some fascinating information. There’s 60 brand new houses active in the MLS from $130,000-$174,000. And 40 of them are pending! So if I’m a builder, I love those odds!

So now is a great time to build! The market is heating up big time! So if you are thinking about new construction, give me a call 419.874.1188 or send me an email at jon@modene.com!

How Will Rising Interest Rates Affect You?

Welcome back to my real estate blog! Lately I’ve been getting a lot of questions from both buyers and sellers about how the rising interest rates will affect them.

Buyers are going to take a harder hit than sellers. Most buyers have been looking at a base interest rate of 2-3% over the past few months. Rates have increased to 4-5% now. This is a huge impact mentally; financially it’s not that big of an impact. You are only going up one point.

To explain financially, a payment for a typical mortgage product six months ago was just around $1,700, now with the increase in rate it’s just above $2,000. That’s a $300 hit on your income. This will cause affordability problems for some which will lessen then buyers’ pool.

My advice to buyers is to get the house you want at the price you want, but with a fixed rate. I would not recommend getting a variable interest rate mortgage.

The rise in interest rates won’t affect sellers as much. You may think that now your home isn’t worth as much, but the reason for that is because appraisers are valuing your home at less. The reason for this is because of the dramatic changes in the market. With multiple offers, I am able to get you more than the appraisal value.

If you have questions about how the interest rates will affect you, give me a call 419.874.118