So we are officially in a recession. The economy is wallowing around in a quagmire of our own creation. The housing market is as soft as that week old avocado on my counter, and I’m starting to think that I, personally, might have a pretty solid case for a government bail-out (everyone else is doing it). As a result of these grim economic times, I get the same question constantly . . . “So, what’s it like to build houses in this economy?” Of course, they actually mean . . . “So, what’s it like to sell houses in this economy?” And, though it may come off a little ad-like (sorry), I’d like to answer that question here.
The question is understandable. With banks currently only making loans to people who have more money than the banks themselves and a distinct cloud of gleeful gloom settling over the talking heads of every major news outlet, doubt and concern are inevitable. Are we screwed? Can we actually hope to sell homes in this market? Who will buy them and why?
I may be crazy, overly optimistic or both, but I don’t think we are screwed. In fact, I think we are in one of the best positions possible at this time and place. The real estate market in Philly, while down, has remained fairly strong compared to the smoking craters that have replaced housing markets in many other parts of the country. It has been particularly good for houses selling under $300,000 and that is right in our wheelhouse.
In addition, we have seen an increase in consumer knowledge regarding the real costs of home ownership. Maintenance, taxes and utilities have finally (we hope) become a part of a home buyer’s consideration. Rather than simply looking at the monthly payment, people are starting to consider the total expense of home ownership, and this bodes well for homes like ours. Our houses will require less maintenance, use half of the utilities (compared to a code built home) and offer a ten year tax abatement (can you say $75 a year in taxes?). They are simply less expensive homes to own.
People also seem more and more willing to pay for green. A couple of recent articles have said that, despite the recession, many consumers are still willing to pay a premium for green gifts this year. If they are willing to do that for gifts, why not houses? We aren’t even asking them to pay more. Our homes are priced below almost every new construction project and about the same as comparable (in size and location) existing buildings. And, they are real, honest to goodness, third-party certified, green buildings.
This is also a great time for consumers to buy a house if they have the money. Prices and interest rates are down, and you could probably get a good deal from a bunch of laid off financial sector executives to move the heavy stuff into your new home. The market is hurting, and naturally, there is something to be said for caution and thrift. For instance, this may not be a good time to blow a wad of cash on a new jumbo flat screen for the guest bathroom, but buying low has its benefits as well. A responsible purchase in a down market can be a great way to take advantage of a difficult situation.
So, in short, I think we are fine, and if, for some reason, I turn out to be wrong, I have a backup plan. I read awhile ago that wine bottles with animals on the label sold twice as well as those without. I figure that if we are, for some crazy reason, struggling to sell the 120k House, I’ll just take a cue from the wine industry. Check out the concept picture. Who wouldn’t want to buy that?
So am I crazy? Am I just a bright eyed optimist in a collapsing world, blind to the economic anvil that’s about to fall on my inflated head? Or, do the factors I laid out above have some promise for us? In short, are we screwed or not?
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