News & Information: REALTOR® Viewpoint

Three reasons why you should buy new construction, NOW

Wednesday, September 6, 2017  
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New-home construction

By Gary Bonacci

As Hurricane Harvey moves on from Houston and the flood waters begin to recede, most people are just beginning to come to terms with how they will rebuild not only their homes but their lives. The reality is it will take months, if not years for Houston to recover. The loss of business and employment will force many to relocate out of necessity. One of the prime landing spots is Orlando, Fla..

Orlando is growing rapidly and is an ideal jumping off point to every major market in the Southeast. Orlando's construction boom is in it's infancy and touches every major economic indicator. From new infrastructure spending on highways, to building a new International Terminal at OIA, to a new soccer stadium and the SunRail commuter rail as well to fostering the nation's second largest housing development at Horizon West. Orlando is also a leader in job growth, and not just in new service industry jobs, but in tech and health care.

The sole drawback? Orlando has a lack of housing supply. Housing inventory in the metro Orlando area is currently at 2.7 months for second generation homes, and new construction is still lagging in government processing. However, Orlando's new-construction sub-markets of Lake Nona and Horizon West are hot.

While I can continue to rave about "The City Beautiful," the reasons to purchase new construction in Orlando now (and when I say "now", I mean that you should be under contract in the next eight weeks) is born of economic factors that will certainly unfold in the coming months.

To understand where we are headed in the coming weeks you need not look any further than Texas and Hurricane Harvey. Whether you believe Houstonians will relocate here (or anywhere) is irrelevant.

Here is what's about to happen in the overall economy in the coming weeks and months ahead, and smart money will heed my advice. As Houston rebuilds over the coming months, it is going to tax raw materials such as lumber, concrete, and drywall (not to mention labor). The cost of those materials is going to skyrocket due to supply and demand. In particular, the supply of drywall is going to become a big issue. Most people are not aware, but U.S. gypsum plants shut down operations for the entire month of December every year. Think about that one for a moment. Just as the demand in Houston ramps up, the drywall plants shut down! The upcoming inventory shortage will be real and tangible. The shortage of raw building materials will not ease until midway through the first quarter of 2018 at the earliest.

So what's that mean for Florida? It means that builders here will begin paying more for materials in the months ahead and guess what? Those added costs will be passed along to the consumer. You take land that is already expensive, increase material costs of construction, and couple that with labor pressures, prices will escalate and escalate quickly!

So, what is the average Investor (or buyer) to do? Lock in those contracts, now! Locking in the contracts leverages your equity as you are purchasing the home at 1) today's low interest rate, 2) the market has not yet affected material prices and 3) the builder, having no option going forward, will increase the price of the same style home and provides you with instant equity!

In January I predicted new-home construction would be the landing spot, and it's proven true prior to recent events. Hurricane Harvey further bolsters my position and I just gave you an excuse to get off the sidelines, get motivated, and set yourself up for a very profitable 2018!


Gary Bonacci, The QS Realty Group, Inc., can be reached at gary@theqsgroup.com. This article originally appeared on Gary's LinkedIn page.

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