Buy Now and Build Now!

I just got off the phone with a buyer and they are seriously thinking of canceling their purchase agreement on land. What is the concern? Did the home not appraise based on the contractors proposal to the bank? Was it materials again? (Those pesky materials in 2020 and 2021 have given the US real challenges) Is it that the buyers wont be able to afford the home based on the currents rates? The answer is...The rate of inflation is currently outpacing everything under the sun and while rates are starting to climb, it is the future rates, this buyer is most concerned about . You see today while rates are at 4.25% the Feds have promised us that rates will be near 6% or higher one year from now. That means that an $800,000 home today costs at closing $3600 per month. Because lets face it, we are buying the house based on our monthly allowance. That same $800,000 monthly mortgage payment will be $6,000 12 months from now.

It is so sad to see buyers let down because of the realization that they can't afford because they were trying to make a good decision by being frugal, living below their means, saving up for down payments, only to be stopped by rising inflation and the feds rate hikes.

So what is the cure?

I'm an extreme optimist to a fault. I wish I could say everything is going to be alright. The truth is we have serious problems in the world that need to be addressed with good leadership. Unfortunately Washington is short on true leadership and that trickles down to our local leaders. I think long term it could be worth waiting out the next year and seeing what happens to our economy for those that don't have a significant down payment. We need inflation to be curbed. We need supplies to flow over our borders without the extreme tariffs. We need rates to stay low and we need leadership to make all these things happen. If you find yourself in the position that have to build something now, I would recommend finding a lender, Like US Bank that will lock in the rate today with their 2/1 "construction to perm" loan.