Yes, the local real estate market is "slow" but we are comparing it to the BEST market of ALL TIME! You can throw around all the statistics you want about home many % the market is down but what it really boils down to is what is happening RIGHT NOW in the local market.
Having built over 30 new custom homes in Frankfort IL in the past 4 years it is our job to know what the local market is REALLY doing.
Here are some of our observations for the Frankfort IL new home market:
- Traffic is pretty light - but those out looking are very serious about buying/building a new home
- When the weather finally got better there were quite a few of the best homes that sold, most for approx 95% of the listing price. The homes that are clean, fresh, have good ammenities and custom features are the ones selling.
- We feel that more than 50% of the current new home inventory on the MLS are "stale" homes having been listed for 365 days or more. These homes were constructed in the "make a quick buck" boom and quite simply don't cut it. They will sell on price point only (reduced that is)
- Most new/fresh inventory that is priced sharply is getting decent traffic and consideration. As the stale homes get older the fresh inventory market will become even stronger as they will not be mingled with stale inventory comps.
- The # of new foreclosures has seemed to slow over the past few months but the recent release of tax bills might make that jump a bit in the fall. We feel that most of the foreclosure inventory falls into the "stale" category at best. That is not to say there is not a diamond in the rough out there but the vast majority of the foreclosure inventory is not on the same playing field as the fresh inventory.
- Building supplies are on the rise (7-10% for most) due to demand from remodeling and gas pricing pressures. Even without damaging hurricanes the cost of constructing a new home is going up, not down. Yes, labor margins in building a home are more competitive but that is being offset by the supplies costs and then some.
- Vacant land prices are soft and you may see some erosion in the near future. Specifically, if land owners bought the land on speculation and are motivated to sell you can find some deals. This is very spotty and it just depends on who you know and/or ask. Builders can acquire land from their builder friends quite easily so don't build a home with a builder just because he has the lot you want. More than likely anothe builder can buy that lot from the land owner an a very attractive price.
In summary we feel that is a great time to buy a home (either fresh inventory or stale inventory) as sellers are still motivated to sell. Expect 3-5% off of list price (which more than likely has been reduced previously). There is also no better time than the present to build a home - it's only going to cost more in the future with the increase in price of labor and building supplies.
Make sure you find a quality builder that is going to be around to back up their warranty. Check references and rely on your gut feel. If it's to good of a deal to be true it probably is.
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