The Money Magazine article we mentioned last week—“Build Your Dream House Now”—is one of the best assessments of the current real estate market that we’ve read. We recommend that you read the entire article, but let’s look at one section that’s particularly eye-opening:

Behind the dark clouds hanging over the housing market is a very compelling silver lining: The cost of building the home of your dreams is coming down. “If one or two years ago it cost you $300,000 to build a custom home, today it should cost tens of thousands of dollars less,” says Jim Haughey, chief economist at Reed Construction Data.

Why? With new-home demand drying up, the price of some construction materials has started to sink like a poorly laid foundation. Framing lumber is now 18% cheaper than it was 18 months ago, while drywall is selling for 40% less.

And because overextended developers picked up too much land during the bubble - and are motivated to sell - some lots are becoming dirt cheap. Land prices (often the single biggest expense for custom homes) in certain areas have fallen more than 20% in the past year or two.

“In terms of finding land you want at a good price, this is the best market that I have seen in my 30 years of home building,” says Carl Heldmann, builder and author of Be Your Own House Contractor.

This is exciting news for anyone who has been waiting on the sidelines for the perfect time to buy. Sure, some will wait for prices to fall even more, but existing home sales increased in February—the first improvement in 7 months. We’ll need to see a few more months of similar gains before we can say with certainty that the market is stabilizing, but it looks like the window to take advantage of these historically low prices will soon be closed.

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