Madison area home prices are rising by double-digits in 2021, which has some first-time home buyers sitting out this year's market with the hope that prices will be falling significantly soon. We don't believe this is likely to happen.
Local trends favor more appreciation
Based on local supply and demand trends, we see prices rising. On the demand side, our population of home buyers keeps growing year-after-year, as Dane County consistently ranks as the fastest growing region in the state. Persistently low supply also points to higher prices: Dane County home building has been operating at subdued levels for the last 15 years, while new condo construction has been almost non-existent.
Building a home has also become a much more expensive proposition in recent years. Labor costs, material costs, and land costs have all risen significantly -- to the point where most new construction homes in the Madison area now sell for over $400,000.
Getting into the real estate game
So, if you can't build a new home for less than $400,000, but you can buy an existing home for significantly less, would it make financial sense to buy your first home right now? We think so -- as long as you view your home as a long-term, multi-year investment.
Even if the home you buy is not your perfect home that checks all of your boxes, it will help you build wealth. By taking good care of your home, paying down the principal on your mortgage, and by seeing your home's value appreciate over time, you can start building equity right now that will help you move up to your next home a few years down the line.
This is the formula that many of our first-time home buyers are following right now. They're getting into the real estate game right now, which will help them move up to their next home a few years in the future.
Do you know someone who has aspirations of owning their first home?
Our team is always available to talk real estate and share our best guidance and advice. Please call us anytime you, a friend, or family member would like a helpful consultation. We are here to help!
This article is published courtesy of: Dan Miller, REALTOR Mad City Dream Homes & RE/MAX Preferred