Want A Good Deal? Come On Down !

Behind every cloud there is a sil­ver lin­ing — so they say. That "silver lining thing" may not com­fort folks who have lost their homes or who are still nego­ti­at­ing with their lenders to stay in houses that have been their homes for years, but for folks who have been hop­ing to buy a home and hop­ing to get a deal — come on down!

Accord­ing to the National Asso­ci­a­tion of Home Builders which keeps track of these things on a global — or at least country-wide aspect — home afford­abil­ity recently rose to its high­est level in at least 20 years.

Sta­tis­ti­cally, “afford­able” means that the median cost of “hous­ing” in a par­tic­u­lar area is offered for about three times the annual earn­ings of the peo­ple who live in that area. So if the median (fam­ily) income of an area was $70,000; an afford­able house there would cost $210,000. Mean­ing that “afford­able” house would have an ask­ing price of $225,000 or even more.

This, of course merges both new and “used” homes into the same sta­tis­ti­cal pot. Usu­ally we see new homes cost­ing more dol­lars per square foot than used homes. But not always, and not so much today. Last Fall John Can­non Homes offered a mar­ket­ing strat­egy — to get some sales — in which they offered some of their homes at $99 per square foot. This price which could grow higher with upgrades, but includes the cost of the struc­ture and the value of the under­ly­ing land.

Our old rule of thumb — when the mar­ket was strong — was that a struc­ture would cost three times the cost of the lot, and so the struc­ture was 75 per­cent of the final cost. This gave us a sense that if a lot was for sale at $50,000, we could build a house that would cost the builder $150,000 and sell the home to a con­sumer for $200,000. Those were the old days.

Today there are land bar­gains for the builders, and there­fore there are bar­gains for the buy­ers when they buy a new home. Gibral­tar Homes has recently been offer­ing new homes at $98 per square foot. I recently saw that a num­ber of lots were sold in Engle­wood with a final price to the builder of $14,000. Don’t use my old rule of thumb today — if you did you would look for $56,000 fin­ished homes on those lots — and that just is not going to happen.

Try to find a new home today in the Florida mar­ket for $200,000. This is a huge value for a new home, even if there have been some cor­ners “cut”. I would expect all new homes to be beau­ti­ful and have a as many gee-whiz fac­tors as pos­si­ble. Think hand­some but mid-range cab­i­nets, maybe a mid-range HVAC, and impres­sive porce­lain tiles and in the kitchen not mar­ble or granite.

And keep an eye out for the unseen costs that are attached to new homes that may seem too good to be true. I refer to costs to fin­ish the home in your own taste — cur­tains and other win­dow treat­ments, land­scap­ing, secu­rity, light­ing insur­ance and taxes plus the ever pop­u­lar Home Owner Asso­ci­a­tion fees, which are not nego­tiable and which may or may not include cable, assess­ment for com­mon areas and the like. In other words, $99 per square foot prob­a­bly is a ter­rific deal, but the fin­ished house may wind up cost­ing a good deal more when you fac­tor in the monthly costs of liv­ing there.

Oh and watch out for CDD costs, more on that in a future column.

Used homes, on the other hand, cost what­ever you can nego­ti­ate, and the costs of main­tain­ing the home should be pretty well known to the poten­tial buyer — and dis­closed — by the seller. There are dozens of homes in the Sarasota/Charlotte County area that are sell­ing for far less than $98 per square foot. Some of them come with less than 10,000 square feet or land — some come with an acre or two. Larger parcels of land are not some­thing the new home builders are “throw­ing in”to attract buy­ers. As a mat­ter of sim­ple eco­nom­ics, builders include the min­i­mum they can which will still make an accept­able and attrac­tive home.

Is today the best time to buy a home, new or used? It is if you are in the mar­ket to buy one. If you need or want to buy right now, you will find a smor­gas­bord of afford­able homes avail­able, from $70,000 duplexes which might allow you to live in one side and rent out the other for some pas­sive income to cover the taxes and main­te­nance; to mil­lion dol­lar beach front homes that used to be mul­ti­mil­lion dol­lar beach homes.

So afford­abil­ity today is its high­est level since we started com­put­ing the HOI,” said Bob Nielsen, NAHB’s chair­man, in a state­ment. “How­ever, while this is good news for con­sumers, both home buy­ers and builders con­tinue to con­front extremely tight credit con­di­tions, and this remains a sig­nif­i­cant obsta­cle to many poten­tial home sales.”

Dane Hahn is a real estate pro­fes­sional in Florida with Tar­pon Coast Realty in Engle­wood, Sara­sota and Boca Grande. And in New Hampshire, he is with Gove Group Realty. He will answer your ques­tions and you can reach him at dane.hahn@gmail.com or by phone at 941−681−0312. See his Florida web site at http://www.danesellsflorida.com/. And his NH web site is at http://www.danesellsnh.com/