The Federal Reserve met for the first time since the turn of the year and announced it would leave rates unchanged for now. The Fed’s last rate hike was in July 2023, and many have been waiting to see what they will do in 2024. While most believe the Fed will start easing rates this year, the big question is when.
Opinion is split on what will happen when the Fed meets in March, and the outcome will depend heavily on what is happening in the overall economy (jobs, inflation rate, etc.). But most experts are confident rates are headed lower, and could reach 6% by the end of 2024.
What does this mean for the overall housing market, especially if you are hoping to build a new home in the next few years? As the demand for housing in northern Virginia continues to build, most experts believe when the dam breaks, the new construction market will see more supply chain issues, labor shortages, and material price increases.
What should you do? You can avoid the mayhem that’s coming by acting now before everyone else does. Why is it a good time to move forward with your project?
Rates May Improve But Building Costs Are Going Up
If you’ve been waiting out the mortgage rate market, you might want to consider what that means for your build costs, as those continue to rise. At what point will it be better to take advantage of lower build costs with an adjustable mortgage rate (there are some great programs out there!), and then refinance when the rates get down to a lower level? As history has shown us, mortgage rates will fluctuate, but once the cost of building goes up, it doesn’t go back down. The cost of building will never be lower than it is right now.
You May Not Need To Close Your Construction Loan Immediately
When you build with NDI, your construction loan doesn’t need to be closed until construction on the house is about to begin. And since there are months between signing your house contract and construction starting, you can move forward on the planning of your custom home now to take advantage of lower build costs, and also get in the queue for construction before the mayhem starts.
Consider these two options…
Option 1: If you are buying the land you plan to build on, you can always settle on the property with a lot loan and then pay it off when you settle on your construction loan after the rates ease. This allows you to lock in your build costs now, while waiting for the rates to drop.
Option 2: If you live in the property you plan to develop, you can keep your current mortgage until you are ready to tear the house down and start construction. Until then, we will get the house plans & grading plan drawn, submit for county plan review, help you make design selections, and more! You can do all the planning ahead of time, and when you are ready (and rates are lower), you can settle on the construction loan.
Everyone agrees that once the dam breaks free, the building industry is going to explode with activity. Avoid higher build prices and get planning now before things get crazy. It’s coming…
Is 2024 the year you will build your NDI home? Contact us today for your free consultation!
Dream. Build. Live.