I grew up along the Susquehanna River and much of my childhood activities revolved around the conditions on the river. In the winter when there was ice on the river we would ice skate. Those were fun times and everyone in my neighborhood would gather after school and skate or play hockey and when it got dark we would build a bonfire to extend the fun time. We would do this night after night and every weekend as long as the ice was safe because we knew it would not last long and if we missed the opportunity there was not a guarantee the river would freeze again for several years.
I think today’s housing market is like the ice on the river. For the past few years prices have been stable and interest rates low but things may be changing and neither one may last much longer. With regards to pricing, we have seen lumber and drywall increase 25% in the past year. Roofing material have announced their 2nd increase in 2012 and siding, windows, doors, appliances, carpet and concrete have all announced one. It seems the housing market is starting to rebound and as it does, prices for materials are rising as demand increases. It is my opinion that the increases we have seen this year are the tip of the iceberg and as the housing market gains traction prices will continue to inflate. The same is true for interest rates. Currently they are at historic lows but as the economy begins to rebound interest rates are sure to rise.
It seems like those wishing to buy or build a home and take advantage of today’s prices and interest rates better do it soon because the ice may be leaving and there is not a guarantee if and when it will return.