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Buy new, buy now

By Jill Ellis-Worthington

Low mortgage rates, a glut of product on the market, lower prices ? a perfect storm for new home buyers

ON THE COVER: Photo courtesy of Eclipse Shutters ? That seems to be the phrase on everyone?s lips these days, at least those who work in the home construction industry. They?ve always wanted us to buy homes and keep the industry perking along, maximizing profi ts and keeping subtrades busy, but why the extra pressure right now? Well, it seems that it might be ?a perfect storm? of events that bring maximum value to the customers. Sure, the industry wants to keep selling houses, but there may just be some truth to the phrase: buy new, buy now. This is the case for Robert Ayres and Sophia Katsios. The recently engaged couple, in their 40s, wanted to buy a home next summer closer to their wedding date, but current market conditions convinced them to take the plunge into home ownership sooner than planned. This perfect storm starts off with the lowest mortgage rates seen in a long time. According to Lois Langdon, executive offi cer for the London Home Builders Association, interest rates really are the biggest reason that people continue to buy homes in a somewhat frightening economy. ?They (mortgage rates) are at the lowest levels we?ve seen in 20 to 25 years.? Ayres agrees that the favourable rates played into the decision to buy sooner than expected. ?Low interest rates allowed us to make a larger down payment. You know that monthly payments aren?t going to be as much of a problem if you have more money to put up front. It defi nitely contributed to our decision, ? he says. The next factor, favourable pricing, also made it possible for the couple to consider a larger home. ?It?s a slow time for builders, we thought we?d get good pricing, ? admits Ayres. ?We felt that if we waited longer, we wouldn?t have gotten as nice or as large a house as we wanted.? The couple has purchased a new home from Doug Durnin, owner of Saratoga Homes, in the Fanshawe Ridge development. Theirs is a twostorey, three bedroom, contemporary home that cost in the mid $400, 000 range. Ayres believes that he and Katsios have realized a savings of $20, 000 to $30, 000 by purchasing in March. The couple takes possession in August of this year. According to Durnin, ?We (Saratoga Homes) have been in the industry since 1985, so we?ve been through a couple of slowdowns. This has shown that it?s the more educated purchasers who buy during the slow times, because they know they?ll get better prices and a better job.? By the latter, he means that subtrades aren?t as busy, and they have retained only their most experienced employees to keep them working at this time. Contractors need to be on their A-game when the economy turns and the building industry heats up again. Durnin explains: ?We still have the best contractors in the business (concrete forming, drywallers, framers, painters, plumbers, electricians, etc.) in this NEW HOME BUYING area. Early in 2003-2004, when things ramped up, they hired new people. Those new hires have had a lot of opportunity to perfect their trades, or they?ve been weeded out.? This is the third factor and is a large contributor to cost savings in new home construction. To keep subcontractors loyal, builders want to keep them working. To keep their employees working for them, those subcontractors are working closely with the builders to ensure that the best cost is achieved. Buying new offers the same benefi ts that it always has, according to Langdon, because buyers get to customize houses to their tastes and needs. New homes also feature the latest in energy effi ciency, which represents ongoing cost savings. Right now, buying new comes with the added bonus of a wider choice of new homes than ever before. ?I think that the change in consumer confi - dence came so quickly that there?s a lot of selection out there, ? Langdon adds. Builders were still constructing homes at the rapid rate mandated by those earlier ?seller?s market? times. When the economy went south last autumn, some builders were left with a lot of inventory and those homes are ready for adoption by loving families. Ayres adds another benefi t to purchasing a new home now: lot choice. ?We got the lot we wanted. It backs onto wetlands and in a busier sales environment, we wouldn?t have gotten it. It would have defi nitely been scooped up quicker.? According to David Lan, market analyst for the Canadian Mortgage and Housing Corporation?s London offi ce, detached home starts in London are near the lowest levels since the mid 1990s, but he adds this bright spot: ?As the economy starts to recover, we expect to see some increases in singledetached home starts in 2010.? It might well be that the current ?buyer?s market? conditions won?t continue for long, so now really is the best time to purchase a new home. THURSDAY, JUNE 25, 2009 HOME MAGAZINE 3

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