As property prices rise on the Palouse, young prospective property owners face a dilemma. Here we’ll explore some reasons for this development as well as the question “should someone looking to enter the property market buy or build their first home?”
Historically, designing and building a home was something considered by those with substantial means or those who have made due, saving for most of their life and were now ready to build their “forever home”. While this is still often the case, a new trend is emerging on the market. Young families, in the first five to ten years of their careers, are ditching their rentals to embark on homeownership, but they are faced with two major problems; prices that are rising quickly with no end in sight and a lack of real estate inventory.
Real estate in Moscow has always been robust, even when considering the downturns of the last decade and a half. Due to state-funded colleges, government jobs, and the utility industry, Moscow didn’t see a recession as pronounced as elsewhere in the country. The result was a stable real estate that continued to climb in the years following the Great Recession. What this means for those entering the home market today is that the average sale price in Moscow as of January 2020 was $399,421 (statistic courtesy of Story Real Estate). This puts homeownership out of reach for many young households.
In addition to high prices, those who can afford a home face the harsh reality of an inventory shortage. According to Kestrel Realty Group, there were seven homes listed on the market in January 2020, four of which were already under contract by the end of the month. The Partnership for Economic Prosperity highlighted the extent of the problem in their recent study. Astonishingly, the Palouse region has a housing shortage of approximately 340 single-family dwellings and will need 270 dwellings per year for the next seven years. This has led to governments and organizations to explore ways to make housing more accessible. None of the solutions proposed by these entities are likely to help buyers looking at housing options today, however. For the time being, people are left with two options; they can roll the dice on a hot market braced for disappointment or they can build. So which should you choose? The answer depends a lot on your goals and priorities for your family and for your property.
Many people have a checklist of features they are looking for in a home and this speaks to the frustration many feel when looking at the available homes in the Moscow area. Often homes on the market will have one or two of the desired requirements but then fail miserably in other regards. For instance, many older homes are in a great neighborhood but the amount of maintenance and improvements needed to make it a good fit can often be daunting or even frightening. Not everyone is up for a full remodel and remodels are costly. This is why many are drawn to newer homes or to building their own. While new construction does come with its own headaches and stresses, they are largely known issues which can be a welcome alternative to running the remodel gauntlet.
Homes built in the 90s and early 2000s are not without their own challenges. The region experienced extensive, slapdash development during this period as well as the introduction of new products and methods that either weren’t fully developed or weren’t executed properly (for more information see this video). Many homes suffered in quality, such as improperly installed siding, insufficient framing, improperly installed vapor barriers leading to rot, as well as a host of others. In addition to these possible issues, the relatively low price discrepancy between newer homes and the cost to build can make buyers rethink whether buying an existing home is worthwhile.
Now a quick disclaimer: we are obviously biased toward building. Buying an existing home will very often be less money but our contention is that, when you look at what your money buys, building from scratch makes sense for a lot of people. So what are you getting when you decide to build? The answer: a home that is what you want. When you build, you get to make the choices, not have them dictated by what is on the market. The house will be in your budget, well built, and on the land of your choice. You pick the number of bedrooms, what your kitchen looks like, and how you feel when you walk through the front door. You don’t have to wait for another ten years for a disruptive remodel to make the home that you love and love to be in. So which should you choose? Well, that depends on what you’re looking for. If you want a home you can improve over time or don’t want the hassle of a new build, buying an existing home probably makes sense. But if you want a space that is custom-built for you, your needs, and your goals, and aren’t falling in love with what you see on the market, consider giving your local homebuilder a call to talk about what it would look like to build your first or forever home.