How Does Interest Rates Affect New Home Sales and Wheres The Best Place To Build?

These real questions on new home starts and interest rates on real estate are answered by a US Master Builder and myself after receiving them from readers of my e-book, "Residential Development Made Easy."

Question 1.

What is the your forecast for home starts in the US for the next 12 months? 24 months?

Master Builder & Developer's Reply:

This depends upon where you are. New home starts are excellent for Florida, Texas, and Arizona.

What most people don't appreciate is that there is always growth in new homes. Cities grow in spurts, but there is also controlled growth. As one part of an area dies from old age it is revitalized and redeveloped.

So remember national growth statistics on new home starts are not much use to you unless you have a national business. The best advice we can give you is to "read" market data - census data etc.

Personally I have kept average residential dollar sales figures on homes for my City since 1974. At first it might appear to be a lot of work, but after you have your base, say 20 years worth of data, you only have to add one figure a year.

My City's growth dollar sales value shows a 150% increase every 8 years. It is valuable to know where you are in the cycle - so it is worth doing the figures.

By that I mean, if you sold a property in the seventh year of the cycle, you'd make about 90% profit on your 'buy-price' but by waiting one more year it becomes 150%.

Stats are important, so do the homework. After all, all you got to do is get some figures from an office for FREE and put them on an spreadsheet.

Question 2.

How do changes in interest rates affect sales of first time new home, middle class, and estate housing? Aside from the obvious, any interesting statistics or trends?

Master Builder & Developer's Reply:

I'll tell you a secret. The answer is that it doesn't affect the new home part of the housing industry. If you watch the news when you hear about the housing industry in a slump or slowing down -- Greenspan in on the news within a few days adjusting the interest rates to ensure continued growth.

The building industry is the engine of our economy. If a country has had an economic slump and the Government wants to kick it off again, they start by 'flicking on' on the new home building industry switch.

It is the quickest to react; quickest to increase employment figures which pays for groceries, mortgages, school fees - you name it. Two economists arguing will give you three opinions, but they all agree on the 'economic multiplier effect.'

That means that a $100 million project has an economic effect in the community of about $230 million. That is the steel in the building pays the company who made it, who then pays the wages of the workers, who then pays the grocer who then pays his staff, who then pay their rent, car payments and so on - it goes round and round.

What does affect the new home industry is lower wages and our jobs going to foreign countries. If people can't afford a home, then they don't buy and that directly effects the housing industry.

Question 3.

What progressive processes are being implemented for more environmentally friendly and better insulated new homes? All concrete framing? (no wood) Other unique materials and approaches?

Master Builder & Developer's Reply:

As a Master Builder, we use the current technology in building material. Concrete is outdated and has many environment problems. Our new homes are the most environmentally friendly homes that you'll ever have built.

No wood is used except for molding and cabinets.

But the problem is convincing the buyer. We have access to material that replaces wood products, that are made up of recycled material that is vastly superior and looks more real than wood.

We have access to luxurious carpet that is made from recycled plastic soda bottles. We have access to recycled paint that has no out gassing. Recycled roofs that have a 20 year warranty. Our homes have an R-70+ rating. Meaning less energy required for heating and cooling.

There are the 'traditionalists' and there are the 'innovative clients' - all we can do is educate and then the clients will benefit and so will the environment.

Question 4.

What changes are being implemented to improve customer service to new home buyers? (My daughter is buying a Hovnanian home for a fraction of my last home purchase, yet she is getting a weekly status call from her new home sales representative!)

Master Builder & Developer's Reply:

This depends upon your builder. In our case we provide our buyers, investors and developers with daily video updates. They log into their account on our site and the site supervisor walks them through what was completed for that day and what is scheduled for the next day.

Our clients have video documentation on their property. We also provide service after the sale. If three years after the purchase, the neighbor throws a ball through the window or the cat destroys the carpet -- all the buyer has to do is log on to their account.

They tell us what needs to be replaced or repaired and in what room and we can do it almost immediately, because everything is in our database about the home.

Author & $1.2 Billion Developer, Colm Dillon, Has Written The Best Selling 'How-To' E-book, "Residential Development Made Easy," With Readers In All States Of The USA, Canada, Australia, New Zealand, UK, Ireland and 79 Other Countries Of His Independent Web Site, http://www.realestatedevelopmentcoach.com/ez

---

Purchase Your First Home with Confidence

If you are making the transition from renter to homeowner,... Read More

Understanding the Escrow (Closing) Process

1. What is an escrow?Escrow is defined as a process... Read More

Buying Outer Banks (OBX) Investment Property

So, you're thinking of purchasing a rental property... Read More

The Costs of Transforming Your Home into a Buyers Dream House

Turning your house into the home of a buyer's dreams... Read More

Buy FHA HUD Homes

FHA HUD homes are those dwellings that have been acquired... Read More

Real Estate Investing - Protect Your Privacy

An irate tenant or disgruntled home-buyer, with the help of... Read More

Real Estate Investing - Books,TV Infomercials, and Seminars

Real estate investing has become popularized today because of real... Read More

How To Simplify Your Real Estate Buying/Selling Experience

Today's real estate consumer has a lot to consider during... Read More

How To Go About Selling Your Home On Your Own

In days of booming real estate, you would think that... Read More

A Simple Step by Step Aproach to Fail Your Way to a Million Dollars

If You want to be Financially Successful you need to... Read More

Sell Houses Fast & Top Dollar: Design Psychology

How would you like to start a bidding war for... Read More

Where Does Your Real Estate Commission Fee Go - Why is The Commission so HIGH?

Many who have bought and sold properties through Realtors numerous... Read More

Florida Investment Real Estate and What Are Considerations Before Buying

Investment Real Estate, First Things FirstConsidering investing in property? What... Read More

Lease Options or Rent to Own?

Finding a rent-to-own house is one of the many ways... Read More

Understanding Opportunity Cost When Investing In Property

While most investors have got involved in property investing because... Read More

Choosing a Reputable Real Estate Appraiser

When you are considering purchasing a property; either for investment... Read More

Investing in Real Estate Vehicle for Wealth Building

Real estate is one of the best vehicles of building... Read More

Basic Real Estate Valuation

Given the current interest (dare I say hysteria) associated with... Read More

Real Estate Investors - Red Alert

How's the real estate marketing doing? Is the huge jump... Read More

Creative Real Estate Investing

With a job that paid $3.40 an hour, I saved... Read More

Real Estate Internet Marketing Is The Way To Go

Real estate Internet marketing is a booming business, along with... Read More

How To Realistically Get Started As A Real Estate Investor

When it comes to real estate investing, most beginners find... Read More

3 Mistakes to Absolutely Avoid in a 1031/TIC Exchange

We've all made bad decisions in the past. Don't you... Read More

Buying a Home: The 5 Biggest Mistakes that a Home Buyer Makes

As a Professional Real Estate Inspector I get to see... Read More

The Perils of the Property Ladder: Has Anyone Noticed the Silence?

There was a time when every conversation was focussed on... Read More

When Showing Your Home

Here below are some of the reasons why buyers may... Read More

Home Inspection Checklist - Home Inspectors

Although architectural details, wall and floor coverings, modern conveniences and... Read More

Real Estate Investing - Makeovers vs. Flipping

Please don't call it "flipping."Some real estate investors who practice... Read More

Cape Coral Realtor

As the second largest city geographically in Florida, this beautiful... Read More

Helpful Hints for First-Time Home Buyers

Buying a house can be a daunting task, even for... Read More

Secrets of Making Money from Real Estate - Part 4

Analyzing and finding the right property deals:Firstly read my other... Read More

Home Staging Strategies

Who are you preparing your home to sell to?You, as... Read More

Selling Your Home: The Power of a Great Sales Flyer

Even though its importance is often overlooked, a great sales... Read More