Spec — abbreviation for speculation — Custom home builders put up new single-family homes and then sell them. In recent months, spec building has been on the Increase.
Total construction spending in May of 2015 reached a seasonally adjusted annual rate of $1.036 trillion, up 8.2% from a year earlier and anticipate 2016 to surpass 2015, according to a Census Bureau report. New single-family construction grew 11.2% in the same period.
“With our involvement in the Windsor at Lewisburg and Lan Avon real estate developments we are looking for investors to allow us to build more Custom Luxury spec homes this season! The Developers have been building and selling custom homes for the last few years and we would like to capitalize on it as well!” said Troy Nonnemacher – Co-Owner at Dogtown Homes. To further improve the situation, the inventory of new and existing homes on the market is still very low, and rental rates are becoming higher than a mortgage. Spec builders, and their investors, see opportunity.
“Spec building will continue to strengthen through 2015 and 2016,” said David Crowe, chief economist with the National Association of Home Builders in Washington, D.C.
The Census Bureau report shows that 80% of all single-family construction for the last quarter of 2015 was “for-sale,” which means that it was spec from large and small builders. “We are constantly surprised at how many builders have already started building and selling spec homes!” said Jamie Gentile – Owner of Dogtown Homes. That percentage was up from 68.8% in the last quarter of 2014. The last time this figure was above 80% was the first quarter of 2006, at the tail end of the boom.
After the real estate bust, construction lending from banks dried up. So spec builders have been increasingly turning to private investment, which has risen from “almost zero” to “22% to 28% for the last several quarters. “We feel that it is a better relationship to work with private lenders to build custom luxury spec homes because there is more of a team effort and the flow of money is more efficient and allows for faster profits.” Said Jamie Gentile.
Dogtown Homes is currently accepting investors for spec building custom homes in the Windsor at Lewisburg Development, Lan Avon Development and some select single Lewisburg properties. Dogtown Homes is currently investigating custom Spec building opportunities in the Danville area and would love to partner with any investors or developers who are interested in truly custom high quality built homes! “We have always tried to get out there before it is popular and capitalize on the market!” Said Troy Nonnemacher.