McMansions – they aren’t building them like they used to.
By JUNE FLETCHER
If you’re looking to buy a brand-new McMansion in the ‘burbs, you’d better act fast. With home prices this low there’s not much incentive for builders to start new houses. And inventories are getting razor-thin: Economists and analysts at the National Association of Home Builders fall construction conference in Washington, D.C. on Wednesday pointed out that the current 7.3-month supply of new homes is the lowest it’s been since 1992.
Moreover, most of the summer’s pickup in home sales and starts, which has since abated, could be attributed to the $8,000 first-time home buyer’s tax credit. With that credit slated to end on Nov. 30—and with continuing problems securing money to build—builders have little incentive to ramp up their production of new homes.
Many places will take years to rebound. Rockville, Md. builder Robert Mitchell says these days he’ll only build a home when he has contract in hand, because his lenders won’t advance money for speculative building. “We sold off our standing inventory,” he says.
There’s no need to panic about a shortage of spec homes in Greenwich not yet, anyway. We have 82 houses built since 2007, ranging from $1.295 to $14.950 million, plus at least another dozen built as early as 2005 and still unsold. But when they go, and I suppose most of them will, eventually, despite so many being in crappy locations, if you want a new house you’ll be paying custom rates, not discounted. You’ll get exactly what you want, perhaps, but at twice the price. So I’d suggest that, if you find a house that you can live with, in a location that’s acceptable, negotiate hard and see if you can get it at a price you’re comfortable with. You can use the money you save to buy Steve Martin’s villa on St. Barts and live happily ever after.
“inventories are getting razor-thin”? I guess they haven’t heard about 1000 homes on the market in Greenwich.
Could be a fool’s bargain at any price
Good land is cheaper to acquire now than during Bubble
Good builders charge less and are more quality focused than during Bubble
Bespoke build entails one paying for size, quality, features one wants, not mega-scale, dubious quality houses w/features spec builders think clueless buyers want
Build process is maybe 2yrs, about what one wastes waiting for ask prices to slowly depreciate on unsold used houses
And time wasted solving quality issues of poorly built spec houses is hard to ever properly value for anyone w/high opportunity costs