Economic Update: Is The Light Green, Yellow or Red For You To Build a Custom Home?

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Your custom home, with few if any compromises, is one of the key decisions you will ever make. It determines where and how you will live, your social and business networks, how you will raise your children and their educations, and on and on. An important part of this is your financial investment. Is it a good investment in the long term – will it appreciate in value, how much,  and is it the right time to build in the short term?

SHORT TERM: This blog is about the financial investment. It is being written on March 11, 2015. As the very hard winter in the Midwest and Northeast is gradually turning into spring and the large piles of snow and ice melt away, the short-term economy appears to be fluctuating.

After record gains for the past few years, the stock market is now bouncing up and down by hundreds of points weekly, and sometimes daily. With so many good things happening, this is frustrating. It is probably simplistic, but there appear to be three primary reasons for these fluctuations: first, oil is way down in price, so oil-related stocks are really taking a hit. Second, stockbrokers fear that, after a long run of good job growth and prosperity, the Fed may now be ready to increase interest rates. And third, Greece seems unwilling or unable to pay back its debt to the European Union, and it teeters on default.

Now for the good: the US economy added another 295,000 jobs in February, despite awful, record-breaking winter storms. Unemployment is now at 5.5%, with almost all the gains in the private sector. More people with more jobs mean more money for everyone. The price of gas is extremely positive news for American consumers. It is also bad news for oil-dependent nations, like Russia and Middle-Eastern nations. The means short-term instability and regional wars, like the ones in Crimea, Ukraine, Syria, and against ISIS terrorism in Africa and the Middle East. This oil price-crash seems permanent, as the USA becomes almost entirely energy independent and the industrial world becomes ever more energy savvy. Interest rates will have a short-term affect, but this economic upswing in the USA will be hard to stop in the next few years. Finally, the problem with Greece really represents a worldwide shift, as China, India and Brazil become giants and non-productive parts of Europe begin to falter.

LONG TERM: In the 70 years since World War II ended, real estate, led by high end residential real estate, has consistently increased. Without exception, the wealthiest people in the nation and the world own significant estates. If you want to get rich and stay rich, this is probably your first and most significant investment.

GREEN LIGHT – BRIGHT GREEN: So, what does this mean for custom homebuilding in America, and especially in northern Illinois? It means that, while there will always be daily ups and downs, we are enjoying overall stability. No matter what happens, there is only so much land. Property is scarce, money (in the form of jobs and low gas prices) is plentiful, and by the simple law of supply and demand, if you can afford it, this is an optimum time to build your family estate, your legacy, or to significantly remodel. Real estate is soaring again, especially when it comes to rock-solid, high-end residential real estate.

You can take that to the bank. No, really. Take it to the bank and see how much easier it is to get a loan for high-end residential real estate. We did, and it is.

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