Interesting Times and Interest Lists

The housing market throughout the nation is getting a lot of attention these days. Has there been such a high demand for homes in recent memory that has caused inventory shortages, bidding wars and price escalations? And what is going on with the price of lumber?

Regardless of where you’re at in the home buying process and what kind of home you’re looking for, we’d like to help you understand the factors that have led to conditions that we’re seeing here in the Utah market where we build.

Along the Wasatch Front we’re seeing a surge of buyers currently. For a time, the global pandemic kept many at home. With those conditions improving, we’ve got a lot of folks coming out of their quarantine experiences ready to get into some place new. Since the Utah landscape has a lot to offer, many of our next generation buyers are choosing to stay here to raise their families. They want to be close to parents and siblings and continue to enjoy all of the recreation they’re used to. They also have lots of great opportunities to work here. Utah’s economy is doing very well and has attracted many businesses to the area. This is not only good for those already living here, but it brings out-of-state folks to the area looking for homes as well.

All of the interest in homes creates a bottle neck for home builders. Because there is much more demand than supply, prices begin to rise. Not only is it hard to find the right place, now it’s becoming hard to pay for it. Demand is so high that multiple offers are often received on available homes in very little time. As one can imagine, any low-ball offer doesn’t have a chance of getting looked at. The serious buyers are offering high, and sometimes higher than the appraised amount of the home. Those paying with cash make that known up front in order to eliminate their bidding competition.

To complicate things further, homebuilders are struggling to keep up on what to price their homes. The cost of materials has risen tremendously recently. Lumber, for example, has quadrupled since this time in 2020. Not too long ago, a builder could settle on a price to build your home and buyers would pay that amount at closing 6-9 months later. Because material prices have risen so much and so frequently, many builders don’t know the actual cost of the home they built until it is all but complete. For some builders, this has eliminated the design-to-build option for buyers and caused them to lean on the inventory they can build and quickly sell (to the highest bidder).

If you find yourself as a buyer stuck in these circumstances, we want to help. We can’t change the conditions that dictate how we’ll be able to keep our business afloat, but we can aim to helping buyers set the right kind of expectations in this market as well as learn how to be best prepared to grab hold of the house they are looking for. Here are a few tips to help you with your experience:

Interest Lists

Interest lists are the norm right now. It’s not your favorite. It’s not the builder’s favorite either. In many circumstances, homebuilders and exploring new ways to become more efficient at informing their interest lists. Establish a connection with the builders you’d care to work with and establish follow up methods that will work best between you and them.

Get Pre-Approved

Taking this step early will help you understand your buying power in this market. Having this step behind you when talking to a home builder will allow you to be more prepared to sign on the dotted line once you’ve found what you’re looking for. Once you’re pre-approved, your lender may have suggestions on maintaining or increasing your buying power. You may want to avoid any new debt, save what is needed for a good down payment, and even pay off existing loans.

Be Ready and Informative

Knowing exactly what you’re looking for and exactly what you can afford will help in this process. Making that information available to a home builder can help them pair you with inventory that suits your needs as opposed to offering you something that is outside of what you’re wanting. Once you find what you’re looking for, be ready to act! Those who can act quickest with the applicable paperwork will end up in front of the seller for consideration.

For additional commentary, see this quick interview with Destination Homes sales veteran, John Dowdle: https://www.youtube.com/watch?v=Vfg4iu7ef98&t=66s