[tsek]

It's the low interest rates plus emigration to the suburbs that created the white hot housing market. Since then it's been compounded by supply chain issues. Prices got pushed to the upper limit in the last few months. Now we'll see if those prices can be maintained - I doubt they can, because all but the wealthy have been priced out.

I only have anecdotes but I know many prospective buyers (who have already accepted that they will have to max out their budgets) have decided to give up. Since then rates have gone up about .75%, so those prospective buyers can now afford even less. The market will have to come to them, and it will. We heard the President yesterday give the green light for the Fed to clamp down on the demand side of the economy. Rates will continue to go up, and the stock market appears to be in the midst of a correction which will also have a significant dampening effect on buyer sentiment and demand.

On the other hand, supply chains may get worse as Omicron will probably run through China. And NYC appears to be getting more dangerous which could make even more families want to leave.

In the grand scheme of things I suspect COVID pulled forward years of demand/emigration into the suburban housing market, and there very well could be a vacuum of buyers that develops. I think the market goes down in the coming months and may drop significantly in the few years after and eventually resembles what we had in 2019.

[JayCT]

Originally Posted by Cambium

Not thinking outside the box... 3's are super low, that's why we wont level off this year or even next year, its the trend, the pattern change of rising rates. That is the 1st step in getting buyers to hesitate. Rates have been low but because of out of control inflation interest rates will go up and up from here.


The million dollar question is, will we go over 7% with rates again? That will definitely put a stop and a down turn to the market.

I say 3-5% and we continue to have a hot market..

5-7% and we stabilize

7+ and we lose value and turn it into a buyers market (that's like years down the line)

But there were points in the past where rates were 7%+ and the market was hot so there's that.

Mortgage rates in the 3’s% is most definitely very low. My first mortgage back in the late 80’s was 11.75% which were insane. Mortgage rates went as high as 18%. Jay

http://www.freddiemac.com/pmms/pmms30.html

[Stylo]

Higher rates could lead to more people not selling and keeping inventory low.

A historically high amount of refi’s happened in last few years. I myself would be very hesitant to move and give up my 2.9% rate.

[17Christian76]

Originally Posted by Stylo

Higher rates could lead to more people not selling and keeping inventory low.

A historically high amount of refi’s happened in last few years. I myself would be very hesitant to move and give up my 2.9% rate.

Not everyone chooses a fixed rate mortgage, but I do see what you mean. Many homeowners have refinanced in recent years. I think inventory stays low but prices come down a bit once the Fed raises rates.

Omicron is also dying off and we have a more moderate, tough-on-crime mayor here in NYC, so crime should come down too. Our real estate market has skyrocketed in the past few months, so the exodus to the suburbs, at least from NYC residents, is essentially over.

[Stepfordct]

Originally Posted by 17Christian76

Yes, I would expect it costing around $2 million all in. I would probably be the GC to keep costs down as well, but it is really an undertaking at this time.

Disregard this if your in the biz already.....
Being a GC as a first timer especially in this market is not for the faint of heart.
All your subs will realize your a newbie and it may show in quality of work, pricing and commitment to the job.

If I build 10 houses a year and call your sub to work for me.....who do you think is having a bad day?
Good GCs know the supply chains locally, the codes in and out, friendly inspectors, who to use and who not too.

Every job has a few surprises. An experienced GC has seen the movie before and can eliminate and or minimize the pain/$.
Just one of those surprises can eat up all the money/time you thought you would save.

Also in residential, your boss is your wife. Think about that....!

Lastly not sure what your day job is but do the math.....

[SteveM85]

Originally Posted by 17Christian76

I think inventory stays low but prices come down a bit once the Fed raises rates.

Absolutely not. If inventory stays low then prices stay up. There's no way around. That's the way it is. 3.5% is still historically low, not going to move the needle much. What's keeping inventory low is seller hesitation. "Where do we go?"
You're going to have to wait for the real correction, whenever that is, it will, history says so. The reason for it is unknown at this time.

Originally Posted by Stepfordct

Disregard this if your in the biz already.....
Being a GC as a first timer especially in this market is not for the faint of heart.
All your subs will realize your a newbie and it may show in quality of work, pricing and commitment to the job.

If I build 10 houses a year and call your sub to work for me.....who do you think is having a bad day?
Good GCs know the supply chains locally, the codes in and out, friendly inspectors, who to use and who not too.

Every job has a few surprises. An experienced GC has seen the movie before and can eliminate and or minimize the pain/$.
Just one of those surprises can eat up all the money/time you thought you would save.

Also in residential, your boss is your wife. Think about that....!

Lastly not sure what your day job is but do the math.....

Good advice and if I could afford to build a 2M+ home then I could afford the proper personnel to get the job done.

[17Christian76]

Originally Posted by SteveM85

Absolutely not. If inventory stays low then prices stay up. There's no way around. That's the way it is. 3.5% is still historically low, not going to move the needle much. What's keeping inventory low is seller hesitation. "Where do we go?"
You're going to have to wait for the real correction, whenever that is, it will, history says so. The reason for it is unknown at this time.



Good advice and if I could afford to build a 2M+ home then I could afford the proper personnel to get the job done.

Not so much a question of affordability, but simple math. GC's can account for 35% of a project's cost. In this market especially, I don't know that it is the best idea to hire one with such a high markup. It'd be a waste.

[JayCT]

Originally Posted by 17Christian76

Not so much a question of affordability, but simple math. GC's can account for 35% of a project's cost. In this market especially, I don't know that it is the best idea to hire one with such a high markup. It'd be a waste.

I am not sure where you got that figure but our GC’s markup was no where near that. It was more like 25%. In fact it depended on the sub price. Sometimes he did not mark up the price. Still worth the price. Time is money and anything that gets you done faster is worth it. You won’t regret it. Jay

[Mike 75]

Originally Posted by JayCT

I am not sure where you got that figure but our GC’s markup was no where near that. It was more like 25%. In fact it depended on the sub price. Sometimes he did not mark up the price. Still worth the price. Time is money and anything that gets you done faster is worth it. You won’t regret it. Jay

Agreed. In my experience its been 20-25% as well. It helps to shop the project if you can. We also found our architect to be a wealth of knowledge and helpful in navigating the selection process, especially with coming up with a list of GCs who would likely be interested in the project.

[SteveM85]

Originally Posted by 17Christian76

Not so much a question of affordability, but simple math. GC's can account for 35% of a project's cost. In this market especially, I don't know that it is the best idea to hire one with such a high markup. It'd be a waste.

For the deathbed home passed on to the next generation, does it matter? you won't remember and they won't care
For a short or mid-term, I'd strongly advise against it, no question.
Best