So what can you expect for 2011? Especially if you are in the market to have your dream house designed and built? I am an architect. I design nice custom houses all over the United States. The residences I design are small, medium, large and gigantic, depending on your perspective. I also design a few compact houses. I am always alert to what the housing market is doing, so you might be interested in how I see things shaping up for 2011 and trends for the housing market.
RESIDENTIAL CONSTRUCTION COSTS: those are still down for right this second. However, I believe that we may see an increase in housing construction costs beginning sometime this year. The reason for some increases? Our economy is on the mend, according to those in the Federal Government and other higher educational institutions. Yes, many things “popped” when the housing bubble burst in 2007-2009. What is happening and has been happening is that bargain shoppers have been consuming the over-supply of unsold speculative houses out there on the market. Let’s say that again: the over-supply of houses is coming to an end. The bargains will be consumed and largely be returned to normal, according to such knowledgeable people as Warren Buffett and other sources. What are the implications for you as a consumer? Get your residential architect to work now designing your dream house so that you can get it bid and under construction soon, before building costs start going up.
EXISTING SUPPLY OF HOUSES: per the above paragraph, the over-supply will be consumed soon. Bargain-shopping well-to-do speculators have been buying up the supply. They will either occupy the houses they have purchased during the down time, or they intend to put them back on the market sometime in the near future, for a much higher price than they paid. Get ready for pricing increases, because the supply is about ready to cross over with demand.
DEMAND FOR HOUSING IN AMERICA: per Warren Buffett and other sources, America needs about 1.2 million new houses each year. The reason the housing bubble burst in 2007-2009 is because builders and other housing speculators built more houses than the demand in America, causing a catastrophic over supply, resulting in a near stoppage of new housing construction in our country for a couple of years, continuing through to today. Has the demand for housing stopped in the USA? Of course not. The pressures of continued population growth, a more educated and growing middle-income consumer generate a pipeline of housing demand that has not stopped. Therefore, when the currently shrinking over-supply of houses is finally consumed by bargain shoppers, construction of new houses will begin again. Will the builders and speculators who were caught in the over-supply of 2007-2009 want to repeat their disaster? No. That means that they will not put themselves into a situation where they have to sell what they build for less than they paid for it. That means that new consumers will have to pay more. Implications: when the graph of supply crosses or merges with demand, housing prices will rise and stabilize, and may even trend slowly upward.
So what does all this mean for you, the family intending to have a new house designed and built for you? Engage your favorite residential architect now. Have them design your dream house, while you can still enjoy better construction prices than you have in decades, and have your architect also help you with finding the right builder for you. Your architect can make sure that you get the general contractor who will give you the best value. Architects are trained to manage the pricing and bidding process for you, which can be a daunting task for the average homeowner. Typically, the architect’s fees are more than made up for by the better pricing the architect can help you obtain through the pricing and bidding process. And, you get exactly the house that you and your family wanted, instead of someone else’s plans.
Moral of the story: contact your residential architect now. You may be entering into the last few weeks of the lowest residential construction prices that you may see for the next several decades.