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How building a custom home can provide you with instant equity

After months of pouring over every decision, you open the door to your dream home on move in day. Imagine exhaling with contentment, knowing you already have equity in your new home. Sound too good to be true? It doesn’t have to be.

Equity is the difference in what a home is worth versus what you owe on it. Generally, the market determines what a house is worth, “a home’s value at any given time is what a willing and qualified buyer is willing and able to pay for at that time” (source).

There are two traditional ways to gain equity, paying what you owe on the house or waiting for the value of home to increase over time. People who purchase an already built home are generally paying the full market price (or more in the current competitive market). They are the people who end up paying for the additional equity thoughtfully built in.

Thus on move in day, if someone has equity in a home it’s usually from their own deposit, not representing any true gain. This is where building a home can present an economic opportunity. For someone to have instant equity in a new build, the cost to build must remain under the appraised market value for the finished home.

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However, many people build a home without gaining extra equity or even spending more than it would be appraised for. This can happen simply because the average client may not understand what truly adds value to a new home. As you can imagine, it is much easier to add cost than value.

Generally, it is the ‘luxuries’ that add up in your budget without really contributing to home equity. When you build, it’s possible to consider these factors along the way. This could leave you with instant equity on closing day, meaning you could turn around and instantly sell your new home for more money than you spent to build it.

Instant equity can be created by considering the overall values of the market in addition to your family’s wishlist. Value comes from smart, lasting decisions that will remain over time. Examples include, adding an extra room, garage, or a home office. While spending extra on your favorite light fixture may feel valuable, it will eventually be outdated and does not represent as much value to the home buyer market.

To gain equity by building, you must balance your wishlist with market must haves. This goal often requires making many decisions based on logical market factors instead of only relying on personal must haves.

With the many decisions required in building a house, it’s important to find an experienced builder to help you maximize equity and avoid spending pitfalls. Their expertise can help you navigate budgeting and keep you from spending more than your future home’s market value.

If you are interested in learning more, schedule a free consultation today with one of our experienced staff members to discuss your goals and how you can build your dream home with instant equity.

For more information on budgeting, read out Decisive Guide to Staying on Budget when Building a Custom Home

-The Team at Stone Creek Custom Homes, proudly building the finest custom homes in the San Antonio Hill Country

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The Decisive Guide for Staying on Budget when Building a Custom Home

Have a contingency fund

We’ve all seen at least one episode of an HGTV show where something goes horribly wrong and the budget takes a major hit. The best way to plan your custom home budget is to leave room for unexpected expenses. Here we suggest to hope for the best, but plan for the worst. Your contingency fund can absorb unexpected shocks without hurting the rest of the budget.

Another benefit of having a contingency fund is having a pool to dip into for pieces you really love that exceed budgets. This is crucial when your dream countertop costs more than expected. Having this fund gives you flexibility to splurge without having to deplete other budgets.

Lastly, we recommend setting aside this fund to give you the flexibility to change your mind. As the framing goes up, you may realize that another window is needed for natural light or another change needs to be made. Budget now to give yourself options later.

Make an itemized custom home budget

We all know it is important to have a set budget for how much you are willing to spend on your Hill Country dream home. More importantly, you need to know how much to spend on each category. An itemized budget provides organization, accountability, and clarity for both you and your builder. Without specified categories, it is impossible to track your progress in spending. This make sure you continue to have funds for the many important things in your dream Texas home.

An itemized budget also allows you to make educated decisions and tradeoffs. If you splurge on a dining room light then others need to be substituted to remain on budget. This clarity allows you to make educated decisions as you choose the features in your custom home.

Work with the right professionals

Most of us aren’t walking around with the expertise on what to budget for things like flooring, drywall, and contingencies. That’s why it’s important to find the people who can. The right professional home builder can help set realistic budget expectations catered to your specific budget and style. Even better, a local builder has specialized knowledge on what your home needs to stay cool in Texas summers. They can also help you set the right contingency fund to avoid going over budget. A good home builder considers factors such as your lot, home plans, and design preferences. A builder with years of expertise in the field often finds ways to maximize your budget for your priority areas.

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Don’t make every nook “Pinterest worthy”

It’s hard to scroll through cultivated images and not feel the pressure to make every nook photo worthy. In reality, not every corner of your house needs to draw attention. While having your dream home should be a priority, it’s important to focus on focal points in your home. This is easier on your custom home budget as focal pieces tend to be costly, but it’s also beneficial from a design perspective.

Allowing simplicity in some features allows show stopping aspects to stand out, such as floor to ceiling windows of your Hill Country view. When every aspect of a home is cultivated for snapshots, it can become overwhelming and even feel cluttered. A more simplistic approach overall allows show stopping features to be appreciated and can help your home feel stunning, rather than overwhelming.

Make a list of non-negotiables

While this may seem counterintuitive, making a list of non-negotiables can actually help protect your budget. This can help you and your builder have a clear roadmap of priorities. At first, every detail in your Hill Country home may feel like a non-negotiable, but with the many decisions that will be made, you will soon learn that there are many things that you simply do not care about as much as lighting, tile, wall colors etc.

This means that items that don’t fall on your non-negotiable list can be substituted for more cost effective options allowing you to direct more funds to the home aspects that you care more about.

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Choose your style before the decisions are made

When faced with warehouses of options for your custom interior, it can be overwhelming, particularly if you have yet to decide on a style for your home. Do you want Hill Country Style, a modern farmhouse, or terracotta tile to incorporate the Mexican roots in the San Antonio area? Without choosing a guiding style, it can be easy to find yourself choosing individual accents that you love that have no cohesion resulting in a chaotic space. Many of the most eye-catching accents also usually come with a hefty price tag.

Deciding upon the style and feel you want for your custom home can help guarantee cohesion and help you decide how to alot your budget. Are the floor to ceiling black paned windows crucial for the style you want? Then splurge! Do you want the look of hardwood floors but are flexible on the type? Then save! Use engineered hardwood that offers the same style for a lower cost.

When designing and building your Hill Country dream home, we know budgeting can be overwhelming. With decades of combined experience in the home building space, our team is here to help with free consultations to help turn your dreams into reality.

Click here to schedule a free consultation for expert help!

-The Team at Stone Creek Custom Homes

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How to navigate building delays in 2021

After staring at the inside of their house for a year, it seems that everyone decided to move at the same time. This includes everyone in the San Antonio area. Like the rest of the US, Texas is experiencing building delays in 2021. With the US housing supply at record lows, more and more people are building. This is creating crunches in supply lines still backed up from pandemic shutdowns.

The already overwhelming process of building a home just got a little more complex. That’s why we compiled this list of how to navigate the building challenges of 2021 from your favorite Texas home builder.

DECIDE WHAT YOU WANT EARLY

With sky high demand for new houses, the rotating list of out of stock or delayed items is ever changing. An experienced team of homebuilders can mitigate this if their customers make early decisions. Decide your design style, important features, and which can be substituted. This helps your builder complete your Hill Country dream home even with Texas-sized building delays in 2021.

FIND AN EXPERIENCED BUILDER

Now is not the time to take a chance on your sister’s boyfriend’s cousin working out of his mom’s garage. An experienced builder will have a deep understanding of home timelines and lumbar and other shortages. Jason Gale, a founder of Stone Creek Custom Homes has over 15 years in home building. Gale shares that “right now we are having 16 week lead times on brick, windows, and garage doors, so some things we are having to order when we sign a contract.” Needing 4 months notice for basic home materials is not a normal industry standard. I’d rather not roll the dice with your sister’s boyfriend’s cousin, no matter how great his mom says he is.

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MAKE LISTS FOR MEETINGS

Before meeting with your architect, designer or builder, be sure to know what you want and what changes you’d like. This is particularly important to do with your architect. Due to the influx of new homes being built, many architects have longer turnaround times, even for minor changes. Delays with your architectural plans have the potential to hold up the rest of the building process.

That is why it is so crucial to organize your thoughts ahead of time and make clear lists of adjustments. This allows your architect to make all the adjustments at once. We suggest looking at your plans and finding kinks you’d like to work out ahead of time. This can help you catch little things, like realizing you need a plug by that countertop for your mixer or a wider doorway in the laundry room. An experienced building team helps you catch these adjustments, but it is still important to consider personal needs.

DON’T ASSUME EVERYTHING WILL BE IN STOCK

Unless you are shopping for fixtures and furniture on Amazon, don’t assume there’s 2 day shipping. Particularly for light fixtures, many choice pieces may be out of stock. Ordering early in the process will help counteract longer lead times for must-haves. We don’t want you to have to miss out on the rattan light pendant or modern farmhouse sink any more than you do! Surprisingly, home furniture is facing similar lead times, particularly when ordering items such as custom couches. Working with an interior designer can help you visualize your space so you can order pieces far enough in advance to have them in time for move in day!

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BE WILLING TO PIVOT

When focusing on individual details, you may become convinced that your Hill Country dream home will be ruined if you don’t have the exact outlet you wanted or the specific window covering. While the details matter, they pale in comparison to the overall feel and style of your home. As you lovingly pour over every detail of your home, it can be helpful to take a step back and ask yourself if this aspect is crucial to the style you want or if a substitute would work. This can help you stay focused on the things that really matter and not get stuck in the delays and decision making. I promise your friends will never judge your choice of outlet, and if they do, you don’t need that kind of friend anyway.

While the everchanging delays may feel intimidating, finding a skilled local home builder and making your design decisions confidently and quickly can make your home building process feel seamless.

Schedule a free consultation here for more information on how we navigate building delays!

-The Team at Stone Creek Custom Homes

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Here’s what you need to know before building in the Hill Country

Building a home can be a daunting task, here’s a few quick tips to get you off to a good start with your Hill Country home.

Emphasize choosing the right lot

Most people picturing their dream home don’t picture their dream lot, but people moving to the Hill Country often have specific reasons for doing so. Are you hoping for some acreage, longing for anything with a view, or hoping for an active community? No matter why you are looking to build in the Hill Country, be sure to find your ideal place to build with a lot conducive for the home you desire. Some developments will offer “discount” lots that seem like a steal, until you realize the extra expenses required to make it buildable. If finding the right lot feels overwhelming, finding a builder with experience in realty can help answer your questions, avoid potential pitfalls, and help you visualize an empty lot as your dream spot!

Set your budget AND consult the experts

We recommend setting your budget before beginning the design process. Having a preliminary budget is also helpful to give your builder a baseline on what aspects you can afford to incorporate in your home. While having a preliminary budget can help protect you from spending more than you bargained for, we also recommend consulting your home building team on how to specifically categorize your funds. Experts can also recommend how much to include in contingency in case of any problems or potential upgrades. We have found that having a little extra tucked aside can be helpful when you inevitably find a dream backsplash or favorite light fixture that is out of budget.

Balance your personal style with features that boost resale value

While you want your home to reflect your style, keeping a future home buyer in mind can benefit you down the line. Choosing classic color tones, adding a home office, opting for modern light and bath fixtures, and keeping an open floor plan are just a few of the many ways to boost future resale value. With expert experience in both building and selling homes, we are happy to walk you through the process of building a home that you and future buyers will love.

Consider local style

Different regions in the Hill Country can have their own unique flair varying from a mix of rustic, modern, ranch style, farmhouse and more. When building in the Hill Country, consider finding a community with exterior styles similar to your own that still boast a unique, custom feel. This consideration can boost future resale value, as neighboring homes can have an impact on your home value when it comes time to sell.

Choose carefully and make final decisions

As you choose design aspects for your interior and exterior, make your design decisions carefully as changing your mind can prolong the building process. While the many decisions can feel overwhelming, using an interior designer can help you visualize each individual decision and guarantee cohesion in the final outcome. Many home building companies partner with designers for that very reason.

Consider your desire for space and your willingness to commute

It’s a common trend, lots get bigger as you move further away from the heart of San Antonio, or any major city. Do you want room for the kids to run around or the feeling of walking around in your backyard without seeing into your neighbor’s window? Are you craving the community feel of a smaller town filled with character, like New Braunfels, Bulverde, or Boerne? At the same time, it’s important to also consider how long you are willing to drive to get to children’s schools or your workplace. And importantly, where is the nearest HEB? Let’s face it, their tortillas are a staple in any Hill Country kitchen. With the rise of workplace flexibility and bustling small towns surrounding San Antonio, it may be easier than ever to move further out, but it’s still important to consider what your family needs in a close radius to home.

Make a list of your ‘must-haves’ and ‘nice-to-haves’

It’s important to cultivate a list of what you need in your future home versus things that are simply a nice addition. For one, knowing your must-haves is imperative to clearly tell your  builder what you need, both for budgeting purposes and for the actual home itself. Scrolling through endless Pinterest photos of dream homes can leave you with a wishlist that may exceed your budget. Making the prior distinction between ‘a want’ and ‘a must’ can provide clarity when the time comes to choose between features.

Don’t forget outdoor entertaining spaces

Picture this, you move your family to the Hill Country, build your dream home, and realize you don’t have any outdoor space to enjoy the gorgeous hillside views. The horror!! It’s important to incorporate large outdoor features  into the budget early on so it can be a part of your overall home loan. Waiting to build a porch, pool, outdoor kitchen, patio or more can sound like a good idea, this means you will later have to pay cash or secure a second loan. This doesn’t mean you need to build the screened in porch, pool, pergola, and outdoor kitchen all at once, but choosing the one you know your family will utilize from the beginning will allow you to have space to enjoy the Texas scenery right at move in. Planning ahead for outdoor space will also leave your home feeling complete, even if there are some big ticket outdoor features that you plan to add later on.

Consider lighting for design and lighting for the sake of light

Including a stunning light fixture can upgrade the feel of a room, but can leave your family in a dimly lit space as beautiful light fixtures often provide less light. To overcome this, we recommend pairing recessed lighting with pendant lighting to mitigate this problem and provide ample light in addition to a showstopping fixture.

Where to put the laundry room

Laundry rooms can be upstairs, in unfinished basements, in the garage…. we’ve all experienced inconvenient laundry spots. While simply having one on the main floor is a common option, one of our favorite tricks is to connect the laundry room to the master closet. This may finally be the solution to get  your spouse to stop leaving their dirty socks on the closet floor.

Consider how noise will travel

It’s important to consider how noise will move throughout your future home as there are many ways to limit noise. The pitter patter of little feet sounds more like a stampede on the wood floors you insisted cover the second level instead of carpet. Saving on a cheaper, lightweight door may leave rooms less sound proof. Additionally, rooms located off the kitchen, play room, garage and other high traffic places may all be prone to noise and should be considered when planning the layout of your home. With a little forethought and expert help, your home can be built to quiet these everyday noises.

Find the right professional to fill in the gaps

While you may be certain that you know, beyond a shadow of a doubt, exactly what you want. There are SO many things that the average customer doesn’t consider. How many outlets does a room need? Which way will water drain on the lot during heavy rain and how do you build to prevent it from pooling inside your new dream home? Our last suggestion is to find an experienced home builder who can give you peace of mind and create your Hill Country dream home.

We hope you feel more prepared for this exciting next step towards your future home.

 

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Here’s what December told us about the 2021 housing market…

1. People REALLY want to buy your home. Like really, really.

The total housing inventory was down 16.4% from the prior December. As a result, the amount of time a home spent on the market was basically halved while receiving double the number of offers. Along with faster closing times, we saw a 13.5% increase in average home price (www.nar.realtor).

For anyone that has shown a house before, you understand having your home on the market for less than a month is a major win for anyone looking to sell. That’s less time spent yelling at the kids “it has to look like no one lives here” with the added bonus of a 13.5% selling price bump.

2. Most people want extra room to accommodate working from home.

Realtors reported over 60% of potential buyers to be looking for extra space in their next home to use as a workplace (www.nar.realtor). While a bigger home can mean a more expensive home in a competitive market, building from scratch allows you to benefit from your high sales price without paying the premium in the current market. Building a home can even allow you to acquire “instant equity” in some circumstances when comparing the sales price of your finished home to the actual cost of building.

3. There will not be a sharp rise in the amount of first time home buyers.

Mortgages are expected to rise but remain near record lows of about 3% interest (www.nar.realtor). While this is a major incentive for new buyers, higher asking prices have prevented a significant rise in first time home buyers. We expect this trend to continue with large down payments creating a barrier to entry.

4. Housing starts may be recovering to pre-2008 numbers.

More new homes were started in 2020 than any other year since the Great Recession. In fact, December 2020 saw the end of a year with the highest number of new homes started since 2006 (www.census.gov). With a constricted pool of options, more and more homes are being built to help meet the demand. As the nation feels the hope of additional economic stimulus,  increased new home projects are expected to continue.