Competition For Homes Has Buyers Scrambling For New And Old Homes
So far, rising rates aren’t stopping people from buying new construction and existing homes. According to the National Association of REALTORS®, November’s existing home sales were up for the third consecutive month.
As homebuyers rush the market to stay ahead of increasing mortgage rates, an already-low inventory of homes continues to get lower. Recent reports show that November’s housing inventory dropped nearly 10 percent since November 2015.
With less inventory from which to choose, many would-be homebuyers are expanding their home search to include newly constructed homes.
Types Of New Construction
Buying new construction can mean different things to different people. You could commission an architect, hire a contractor and get a completely custom residence.
Alternatively, you could go with a “semi-custom” home, in which a developer offers several models. You get to choose some of the interior and exterior finishes, but the basic floor plan is pre-determined.
Or you may select a house that’s completely pre-built by a developer or speculator.
Buying New Construction: It's All Yours
A home is typically the biggest purchase you make. Why settle for someone else’s choices on cabinets and flooring?
Having a home built from scratch means you get to personalize your new home the way you want it.
If you’re not having your home custom built, you can still upgrade. Most give you a choice of finishes, fixtures, appliances, etc. Upgrade costs can add up quickly, but if customization is important to you, it may be worth the expense.
Even with a pre-built newly constructed home, chances are that you’ll enjoy many of the modern day layouts that come with buying new construction.
Newly-built homes appeal to many, because they tend to have fewer problems. After all, everything in a newly built home is, well, newer.
Advantages Of Buying New Construction
Most newer homes feature more open floor plans than their older counterparts. They often have larger kitchens, which flow nicely into family rooms.
Another very appealing feature that comes with buying new construction is the energy savings. Today’s new homes are more energy-efficient than homes constructed just a few years ago.
The old adage “they don’t build ‘em like they used to” doesn’t apply to the energy efficiency of today’s new houses. Many new homes offer double or even triple-pane windows. Walls, floors and ceilings tend to be better insulated. Older homes can be drafty, resulting in higher utility bills.
New homes also mean new appliances, which require less energy.
According to a 2016 survey by the National Association of Homebuilders (NAHB®), Energy Star® appliances rank high on the list of features considered essential to buyers.
Dealing With Problems
There’s a saying in the auto industry that when you buy second-hand, you’re buying someone else’s problems. This could also apply to those who purchase pre-owned homes, especially older ones.
You may be able to negotiate a home warranty when buying a resale home. Even so, most or all of the structure will naturally be older. In addition, it’s possible that appliances could fail just outside of their warranty period.
All new homes come with warranties. New home warranties can vary by state, by builder, the component of the house, and the type of warranty.
Some new home warranties are backed by the builder; others are by independent companies hired by the builder.
Before buying, ask questions about what is and isn’t covered under your warranty.
Newer Homes, Higher Costs
Naturally, expense is one of the most important factors when buying a home. Newly-constructed homes tend to cost more than similar pre-owned houses. New roofs, new appliances and modern building materials come at a higher price.
According to the U.S. Census Bureau, the median price of a new home was $304,500. However, the median price of an existing home was just $232,200.
In a slower housing market, builders offered tons of incentives to lure new home buyers. It wasn’t uncommon for a builder to throw in major appliances, upgrades, and even bonus cash for closing costs.
In today’s market, however, builders aren’t throwing money and incentives around like they used to. With existing homes at historically low-inventory levels, they don’t have to.
If time isn’t on your side, you may not be able to wait for your new home.
A new home’s build time depends on a number of factors, but the average time to build a house in the U.S. is six months.
In colder climates, however, it could take longer to construct a new structure. Find out how long the process will take before taking the new home plunge.
New houses generally come with new landscaping. The mature trees and shrubs of established neighborhoods take years to develop.
Finally, developers usually locate projects in the suburbs or exurbs. You may have to put up with longer commutes.
What Are Today’s Mortgage Rates?
Take your time to weigh the pros and cons of buying new versus pre-owned. Getting your financing in order is the first step.
Get today’s live mortgage rates now. Your social security number is not required to get started, and all quotes come with access to your live mortgage credit scores.