2011 and 2012 are the best years in the past four decades to build a home, based on the current home building cost and interest rates. If you have a secure job and good credit, now is the time! It is in your best interest to act now, provided you are economically prepared. In 2013 interest rates could rise, and materials prices are already slowly inching up a bit. So far though, most home builders are absorbing the slight increase for the opportunity to build a home.

Current Home Building Cost Factors

Current Home Building Cost Factors: Which Contractors or Home Builders
While some larger home builders are not eager to build right now, based on backed up inventory, most small homebuilders and contractors are actively seeking work, and might be ready to make a deal. In addition some subcontractors and individual construction workers are desperately seeking employment. According to President Obama, as of late August 2011, over two million construction workers are out of work. The best way to make an impact on your own bottom line, and the economy is to hire small but reputable home building companies, who are seeking work.

Current Home Building Cost Factors: Timing

While materials have inched up a few tenths of a percent each month, the cost of labor is dropping and interest rates are at an all time low, and have been since 2009. This trend will most likely hold through most of 2012. That is just the right amount of time to plan your home, and get it started. Lock in these great construction loan and mortgage rates while you can. The FED is struggling to keep interest rates low, when logically they should rise. The situation is handled only through 2012 and interest rates could easily jump suddenly in early 2013 according to some economists.

Current Home Building Cost Factors: Interest Rates

Interest rates are probably the greatest factor in the overall cost of housing. When you see the usual breakdown of costs for construction, you see that materials are 25 percent, labor is 25 percent, 25 percent land, 12 percent for builder profit, and 12 percent for builder overhead. The real breakdown of actual cost with a 30 year mortgage is something like this

15.5% for labor
15.5% for materials
15.5% for land.
7.7% for builder overhead
7.7% for builder profits
38% interest

Believe it or not that’s about the best it has ever been with a 30 year loan. With a 15 year loan, the cost of interest is only about 16 percent. That is why it is better to get a 15 year loan if you possibly can. In the 1980s, when interest rates rose to 18 percent, people were paying 82 percent in interest and only 18 percent of their payments were going towards the principle of their 30 year mortgages. Don’t let that happen to you. Lock in your low rates now.

Current Home Building Cost Factors: Labor and Materials Costs

Labor costs in most areas are very low right now, but as the economy improves wages will have to be more in line with growing inflation rates. Labor costs, and especially home builder profits could rise abruptly once the economy normalizes. There is no way to know when this will occur, but eventually wages will rise to meet inflation. Material costs are inching up slowly, and this trend will likely continue. Currently though it’s not enough to make a significant difference to prospective home owners.

Now is the best time in decades to build a home, provided you are currently financially secure. Start planning and preparing today, to save money on interest, labor and other building costs. For more information on how to save on current home building cost, see our 98 page free home planning guide, and read our many free articles.

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