How Low Interest Rates May Offset the Rise in Building Material Cost
Despite that we are all in the midst of a global pandemic and lumber prices are doubling in some cases, the demand for new residential construction remains high. This is primarily due to the lack of existing housing inventory, as well as interest rates being at historic lows. Renters and multi-family homeowners now are finding it affordable to own their own single family home as interest rates hover at around 3%. Buyers also are willing to venture farther from cities to areas where housing costs are more affordable now that employers are allowing employees to work from at home.
Amid these low mortgage rates and even as material costs are rising, the math still works in the favor of the purchaser. In 2020, the median cost of a new home increased by more than $16,000, according to the National Association of Home Builders. With interest rates at 3% for a $200,000 home, home buyers could see a savings of $40,000 over the life of the loan. This is compared to last year’s 4% interest rate.
For more information about how you may afford your new home, consult with your local lender. For questions about new home pricing, contact Virginia Building Solutions at email@example.com or at 855-870-4663.