Is Now Actually A Good Time For Construction?

Look, sentiment in the home building industry is at all time lows.

Builders are very skeptical and really scared to build any kind of spec homes and even

get involved with constructing new homes for clients.

What's the reason?

Well, they say we're in a housing recession and certainly the volume of home purchases

is plummeting.

Not as many houses being purchased.

The prices are still holding about where they have been.

There may be a little softness in some areas.

Some areas are actually even higher in the last three or four months, but the volume is

down.

It's a lot of psychology in this housing recession.

However, there's one thing to keep in mind that as a builder, this might be the best

time to build a house.

If nobody else is building, you could be the contrarian where you're not going to go out

on build 10 spec homes, but lumber prices are down, labor is a little bit more available.

There's not as much of a competition for building new homes, but what is still in place

is the demand.

There are still four or five million unfulfilled home buyers out there that tried to buy

a house in the last 24 months and could it because of bidding wars, because of lack

of inventory, and there's still out there.

Yeah, there's more inventory, but if you could, in some of that inventory or houses that

maybe are what they call left handed, meaning that they're not the best options, they're

not very appealing, not competitive.

If you build a new house, we'll first of all now you have no apologies, everything is brand new.

And if you can use efficient construction methods and don't overbuild, you don't want to build

a $900,000 house, $800,000 house.

Depending on the fees and the land cost in your area, if you could build something for

340, 350, maybe 400, sell it at the current median price, which is 440, I think, or

430, make a little bit of a profit, and still have a new house for median money.

You might be an opportunity where you can turn the house, that's if you don't have any

other work to do.

Look, if you've got remodels and additions, forget about it.

But if you're a builder, you build a house that you can sell for mid to low floors, you're

not going to get her on that house.

Doesn't matter what happens with recession, even if they say it's no signs of abating,

probably true.

The volume is probably not going to be what it was two years ago, three years ago, but

there's still people to need to buy a house.

If you have a brand new home constructed properly, offered at or around the median home

price, you're probably not going to get her on that deal.

And you can make a little bit of a profit.

This may not be really important right this second, because there's still a backlog of work.

Look, we're talking to a lot of subs.

We talked to a roofing sub two days ago, that is 12 to 14 months backlog.

If you book them right now, he can probably get to it by the end of 23, maybe beginning

of 24.

Roofing job.

He's booked.

That's good.

But at some point, this backlog is starting to erode away.

So maybe if you have property, or you can get a property on option, or lock up a property,

start putting in the permits, doesn't cost much for permits, a few grand, start putting

in some design work, maybe site work in between doing other jobs.

You can scratch around with your excavator.

You probably don't want to start digging septic systems or porn concrete, but at least

start to get a lot ready so that if the beginning of 23 or the middle of 23, there's

an opportunity to knock out a house.

You're ahead of the game.

You're not six months behind on permits and approvals.

So even though it's counterintuitive, a lot of you might say you're crazy, there might

be a really good time to build some medium price out.

You're not going to build below market house.

It just costs too much to build between labor and materials.

But you can probably build something into four to five hundred range, depending on what the

permit fees and development costs in your area, that you can turn out a house and work

on it in between your other jobs to keep all your equipment busy and keep your capital

improvements advertised.