GIVING BACK

NEW HOME OR REMODEL? UPDATE FROM A BUILDER

In this unprecedented, volatile housing market, it continues to be difficult to make the best decisions for either building or remodeling. Because so much is at stake that will be life changing, extremely expensive and time consuming to completion, you want to make the smartest best decisions. Couple those concerns with positives such as interest rates continue to be low, homes are still selling at a rapid clip, and just in the last few weeks, at last, lumber prices are dropping as mills pick up the production slack. What to do now, as we get out from under the pandemic, and we soon will be heading into 2022? What is your best direction?

Build or remodel?

Among others, you can turn to real estate agents who have their finger on the pulse of what is selling now. You can turn to lenders who have insights into trends in rates. And, you can turn to builders, who are facing all these issues, and interact with all the players in the housing market. It may be smart to talk to all three types of experts in the housing market. When it comes to builders, you may want to consider Marcin Kawa, owner of MK Construction that he founded nearly two decades ago.

Here are a couple of his key observations.

1. “I try to stay on top of trends in new home construction and remodeling markets. For example, in an article by

Robert Hughes, American Institute for Economic Research, June 21, quoting Refinity Datastream, let me quote you: ‘Sales of new singlefamily homes fell sharply in May, decreasing 5.9 percent to 769,000 at a seasonally-adjusted annual rate from a 817,000 pace in April. Weakness over the last few months in sales of new single-family homes is consistent with signs of slowing in the market for existing single-family homes as well. Nevertheless, sales are still up substantially vs. a year ago for both.’ In my opinion, the record high prices are a key factor in slowing sales and helping to push up inventory of both existing homes and new home construction.

If you are trying to sell your singlefamily home, that means there is more competition which is reducing the rate of price increases. Those high prices have also driven some people out of the market for the time being. I see a moderation of the rush out of dense urban areas like Chicago, where we build, to the suburbs.

The slight slowing in sales is also due to the recent slight increases in mortgage rates. But some people see those rising interest rates and say maybe I need to act now. 2. I also pay very close attention to the costs of construction. There has been a lot of talk over the past several months that the price of lumber has made new construction and remodeling so expensive that consumers and builders are holding off. However,

in just the past few weeks, believe it or not, lumber prices have started to come down. Let me quote you from an article from the New York Times, by Matthew Phillips using data from the Commerce Department, Federal

Reserve notes: ‘Lumber futures surged to unprecedented heights, peaking at more than $1,600 per thousand board feet in early May. Lumber prices in the futures market, for example, are down more than 45 percent from their peak, slipping below $1,000 for the first time in months as saw mills ramp up supplies.’

In other words, supply and demand is at work at many levels. If you want to stay up with trends, I would be glad to talk with you so you can make decisions on whether to build or remodel, and when.” Here again, from Marcin, are some of the practical pros and cons of building a new home vs. remodeling.

The Pros of a New Home

There are several reasons people choose when it comes to building a new home. “First, and foremost: Appropriate customization. This assumes you have thoroughly thought through your potential future for the next 20 to 30 years, beyond the last unusual 12 months.” “You have been cooped up with your family for last year, more than ever before, so you have gotten to know everyone a little better and vice versa. You know yourself and your significant other better. You know the kids a lot better. That means you know what interests each family member has and what they don’t like. We all know how important the kitchen is in most homes. How important has the kitchen been the last 12 months? Has it become the nerve center for the family, where the meal making takes place as well as meal eating takes place? Is it a study center? When things get back to ‘normal’, will family members still want to get together as much in a central place like a kitchen?”

“Or should a dining room or dining area be the focal point? Is a lot of open space the future for a new home? Is a home office/ study area a permanent requirement, or will that space go for other activities? Is the company you work for going to allow you to still work at home. Or, will you be commuting and going back to an office? Or, is your work situation going to be a hybrid of work from home and work from the office? “There are a lot of other decisions. How about your bedrooms? Is there What kinds of cabinets, flooring, a great desire to have not only a great bedroom suite but also a spa/ roofing, appliances, fixtures, bath where you can get away and luxuriate? Separate bath for the landscaping, on and on. Then kids? Study areas in bedrooms for there are the inevitable “hidden the kids? Is it a family room? Or is it a tv/tv games room? Or a workout costs” unless you have planned room? Or all three?. Or do you need separate rooms?” exceedingly well.” “How about not so mundane factors such as lighting and - MARCIN KAWA, windows and landscaping? Do you founder and owner, MK Construction & Builders like to have the outside view of a beautiful backyard, or do you want more privacy? Do you want both?” “Are you big into outdoor play and entertaining, inside and around the home? What kind and what size patio would you like to have in the future? How important is “grilling” to you? How about the location of outdoor entertaining relative to the kitchen? How about the garage? Besides the cars, has it become the mud room, back-pack room, and outdoor