Why 2023 May Be the Best Time to Build a Custom Luxury Home in Orlando
Reduced supply chain volatility and a booming economy in the Orlando area makes it the right time for building the custom luxury home of your dreams. Additionally, economists expect mortgage interest rates to possibly dip later in 2023.
These are just two of the reasons that 2023 may be a great time to build a custom luxury home in Orlando. Let’s explore all the reasons in more detail.
Building Material Inflation Under Control
The construction consultants at Mortenson expect construction industry inflation to recede to about 5% or 6% in 2023. This rate accounts for various material commodities. Some may cost more going forward, but others have come down from previous price spikes, particularly lumber.
In 2020 and 2021, lumber prices surged. Production disruptions that reduced inventory coupled with high demand caused shocking price increases. In the early part of 2021, 1,000 board feet cost well over $1,000.
Fortunately, by late 2022, normality returned to the lumber market. Lumber futures in November 2022 traded at $429.40 per thousand board feet, which was a decline of 30% from a year earlier.
Global supply chain problems also appear to be easing. A survey of building supply dealers showed that 64% of them reported that the situation is better than it was. In this environment, home builders can expect to complete projects with fewer delays in 2023 compared to the prior three years.
Greater stability regarding both material availability and price removes uncertainty. You and your home builder can plan a luxury custom home project with fewer concerns about long delays or unexpected price spikes.
Better Financing Environment
Anyone thinking about financing a home in the last half of 2022 found out about rising mortgage interest rates. The Federal Reserve imposed multiple interest rate increases in 2022 in response to inflation.
This tactic is meant to restrict the money supply in the economy by discouraging people from borrowing money. According to CNBC, the interest rate peaked in 2022 at 7.12%. This is several points higher than what borrowers could get the year before.
As expected, the higher cost of borrowing slowed down the housing market on the national scale. Even so, the market remains active around Orlando due to the desirability of the region.
Because inflation has eased somewhat, economists are hopeful that the Federal Reserve will actually cut rates again in 2023. In the second half of the year, the rate for a 30-year fixed rate mortgage could be 5.25%.
Regardless of how closely this prediction matches what happens in the future, the general sentiment is that rates should ease back. As a result, you can expect to finance your new home at a relatively modest interest rate. It won't be as low as the extreme lows of a year or two ago, but financing costs should not inflate wildly either.
In fact, worsening economic conditions could favor your custom home-building plans as long as your income remains stable. A recession in 2023 would likely motivate the Federal Reserve to edge interest rates back to mitigate the economic harm caused by the battle against inflation.
Strong Orlando Area Home Values
You naturally want to build your custom luxury home in a place where it will retain its value and hopefully appreciate. By this measure, the Orlando metropolitan area is an exceptional location.
The market has been extremely strong historically, driven by high demand and a constrained inventory of homes. The past decade has overseen annual real estate appreciation rates above 10%, which is above average compared to the country as a whole.
Admittedly, the jump in interest rates has turned down the music at this party, but forecasters remain confident that real estate values will continue to climb in 2023, if only modestly. Zillow analysts expect home prices around Orlando to increase by 3% through September 2023.
Overall, Orlando and the surrounding counties are still sellers' markets. Chronic underbuilding of housing inventory for years has kept buyers at a disadvantage. Demand for homes also remains strong because many people aspire to retire to Florida, and younger people move to the Orlando area due to healthy employment opportunities.
Benefits of New Luxury Home Construction
Building your own home in Florida may cost a little more than buying an existing home. But the modestly higher upfront cost of building your own home repays you in many ways. Here are just a few:
No Big Repair Bills
For starters, new construction means that the roof, heating and cooling equipment, and appliances are all brand new. This is rarely the case when you buy an existing home.
As a result of building a home, you should not have any major repairs or replacements to contend with for up to ten years.
When you work with a reputable custom home builder, you get a home warranty. The company offers assurances that the construction quality is acceptable, and it will correct any problems that arise in the first few years.
Manufacturers continue to improve the energy efficiency of building materials and appliances. When you build a custom home, you have the opportunity to use the most efficient techniques and install the best-performing appliances and heating and cooling systems.
Not only will your new home be exceptionally comfortable, but the cost of operating it will also be lower compared to older homes. The energy efficiency insulates you from inevitable rises in electricity and natural gas.
Potential for Home Insurance Discount
Insurers like homes built in accordance with the latest building safety codes. They value the quality of new materials and construction standards.
Their actuaries figure that new construction is best suited to resist damage under a variety of circumstances. For this reason, you could get a lower insurance premium than if you had bought an older home.
Luxury Living Close to Nature and Orlando
Compared to the previous three years, 2023 presents a welcoming environment to those who plan to build a custom luxury home near Orlando. The relative stability of the supply chain and interest rates in 2023 point toward it being a suitable year to break ground.
Inflation will remain a stubborn issue, but future years cannot realistically promise lower prices on materials and labor.
To take advantage of the excellent economic environment around Orlando, consider joining the luxury community of Bella Collina. Our private, gated golf community has many exceptional custom home sites available and several award-winning builders from which to choose.
We're part of the greater Orlando metropolitan area, located on the shores of Lake Apopka and Lake Siena. Residents live among soothing green hills but remain close to a thriving urban area.