The Oak Leaf – September 2020
Log Home Appraisals, Comps and Changes in the Market!
Welcome to the September 2020 issue of The Oak Leaf, written by Lynn Gastineau, President of GLH. For new readers, this is our monthly newsletter sent to those that have expressed an interest in Gastineau Log Homes. We use this as a way of communicating technical, design and industry information.
The GLH National Model Home Center is again open 7 days a week. See below for hours!
Trivia Question: What building material (wood, steel or concrete) has the smallest overall environment impact? (See the answer below.)
Log home appraisals, comps and interest rates: what is changing.
A concern often voiced by bankers or appraisers is the lack of “log home comparables” for appraisals of new construction. The truth is that there are a lot more comps becoming available because more log homes are hitting the market. Why is this? Many people build their log home with the intention of living in it the rest of their lives. And now many of those people are reaching an age where they have to move out of their home for various reasons. We have become aware of several of our homes that have recently come on the market throughout the US. We have photos of some of them in this months Oak Leaf.
Are comps really an issue with log home construction loans? Regardless of what a banker may say upon your pre-qualification visit, we do not see comparables being an issue in getting a good appraisal for the following reason: 1. A “comp” is only good for 6 months. In other words, the home has to have sold in the past 6 months. Bankers do not know what has been sold recently and have no idea what comps are actually available. In reality, however, log home sales more than likely have happened. 2. Log home loans do not have to have log home comps. FNMAE only requires that the comps be of “similar appeal.” That means something similar in design and location. So if you are building a one story log home in the woods on 5 acres, they can use a one story frame home on a similar site for a comp. They would not use a two story colonial on a 1 acre lot in a subdivision. 3. Be sure to instruct your bank that you want an appraiser to do your appraisal that is “experienced in log home appraisals in my area.” Even though the cost of the appraisal comes out of your loan proceeds, you are paying for the appraisal. And it is federally legislated that you have the right to request a qualified appraiser. Do not let them send out the next appraiser in the “que” who may know nothing about your area or about log homes.
Today’s market: The real estate market is definitely changing as a result of COVID-19 and political unrest in the US. Many people are opting to move to more open spaces, specifically to suburbs and rural communities. According to a CNBC survey, 43% of millennials (the largest home buying sector) are considering such a location for their new home. In addition, more and more families are looking for a second home, within driving distance of their existing home, that will be more than just a weekend home. Families, especially those with school-age children, are looking for a safe haven where they can work and school remotely. This search has driven home and land sales to double in some regions of the country.
Selling your home to build a new home: If you have a home to sell, now is the time to put it on the market. Today is definitely a sellers market. The Nat’l Assoc of Realtors states that home sales would be up much more if there were more homes to sell. NAR says that homes are going under contract in record time, with nine new contracts for every ten new listings.
Lowest interest rates in 50 years: We have been hearing about low interest rates for over 15 years. But today’s rates are the lowest in 50 years! Gay Cororaton, senior economist for the National Association of Realtors, anticipates the 30-year fixed rate hovering around 3% to 3.1% in September. Three years ago a $250,000 home with a 20% down payment at 4.5% would have a monthly payment of $1,013.37. Today you can build a $300,000 home with 20% down at 3% for $1,011.85. That is $50,000 more house for virtually the same payment!
The GLH National Model Home Center on I-70 in central MO is back to normal business hours! Come walk through 3 of our homes Monday – Friday 8a-5p, Saturday 9a-5p, and Sunday 12a-5p. No appointment necessary. Click here for more, including directions.
2020 Construction Seminar Schedule:
Click here for information on our one day construction seminars.
September 28th, 2020 GLH will be hosting a Construction Seminar at the National Model Home Center in central MO. It will be a very small class, so spots are limited. Contact the GLH office for information on how to sign up. Reservations are required.
Answer to the Trivia Question:
In an study by the College of Natural Sciences at the University of Massachusetts Amherst, it is wood. It is long lasting, reusable, has a longer life cycle, sustainable, reduces carbon, lower cost and require less energy to produce and distribute. Read the entire article here.