Lots Of Things To Consider! Reach Out To The Experts: Bruce Clark & Veronica Ruiz
If you’re thinking about buying a home, you might be focusing on previously owned ones. But with so few houses for sale today, it makes sense to consider all your options, and that includes a home that’s newly built.
The Number of Newly Built Homes Is on the Rise
While there are more houses for sale right now than there were at this time last year, there’s still a historically low number of homes available on the market. One reason for that is years of underbuilding—meaning there haven’t been enough new homes built to keep up with demand.
The graph above shows how low the production of newly constructed homes has been over the past 14 years. But it also shows another important trend: the number of new homes being built each year is on the rise. As Mark Fleming, Chief Economist at First American, shares, that’s good news for buyers:
“While existing-home inventory remains limited, the silver lining for home buyers is that new-home inventory is on the rise, and a new home at the right price is a pretty good substitute.”
Builder Incentives Can Provide a Boost
While there a growing number of new homes for sale, builders are slowing that pace until they sell more of their current inventory. According to Logan Mohtashami, Lead Analyst at HousingWire:
“The builders have to work off the backlog of homes, but instead of 3%-4% mortgage rates, they’re dealing with 6% plus mortgage rates, which means they have to provide many incentives to make sure those homes sell.”
Many builders are now offering incentives to help buyers purchase these homes. Fleming also explains:
“The National Association of Home Builders reported that nearly two-thirds of builders were offering incentives, including mortgage rate buydowns, paying points for buyers and price reductions, which could entice potential home buyers.”
A builder who’s willing to pay to reduce your mortgage rate could be a game changer. Ksenia Potapov, Economist at First American, puts it this way:
“A one percentage-point decline in mortgage rates has the same impact on affordability as an 11 percent decline in house prices.”
Should You Buy a Brand-New Home?
The best way to decide what type of home to buy is to work with a trusted real estate professional who can help you weigh the pros and cons of each option. They know which homes are available in your local market, and which builders might be offering incentives that make sense for you.
What About Additional Expenses?
When buying a newly built/custom home, most times the buyer is responsible for the landscaping. Want a pool or spa? How about fruit trees, a built-in BBQ, lenai, covered deck: all these things add up. And don’t forget that, on average, a buyer of a newly built home adds up to 20% of the purchase price in upgrades, some that might be included from above.
Other additions/changes could be custom flooring and cabinetry, exotic materials, premium paint, recessed lighting, whole-house audio, and central home automation/ audio and or video control systems as Control 4, Creston, or Savant, which can add potentially hundreds of thousands of dollars to the final build/purchase price. Or, for less customization, even a system from Google, Apple or Amazon can get up in price quickly
Finally, don’t forget that licensed real estate agents work with buyers daily: working with a licensed real estate agent (us!) can be beneficial when buying a new home in many ways:
- Access to all homes listed for sale on the MLS and more: maybe a new home isn’t right for you at this time. We have have access to multiple listings in your desired area, including properties that may not be publicly listed online. This can give you a wider range of options to choose from and save you time in your search.
- Expertise in the market: We have a thorough understanding of the local housing market and can provide valuable insights and advice on neighborhoods, home values, and market trends.
- Negotiation skills: We can help you negotiate the best deal possible on your new home. They have experience in negotiating with sellers and can use their knowledge of the local market to your advantage.
- Assistance with paperwork and legalities: Buying a home involves a lot of paperwork and legalities: we help you navigate through the paperwork and ensure that everything is done correctly and in a timely manner.
- Inspections: We’re there with you during the inspections and walk-throughs. Since we walk through many, many homes each month, having us during these are invaluable as we will provide guidance on many issues regarding the home and what we see as needing attention prior to the closing of escrow.
- Professional network: We have a professional network of home inspectors, mortgage brokers, plumbers, electricians, flooring, and other professionals that can help you during the home buying process. This can save you the headache and hassle of finding local vendors that you have no experience with.
Overall, working with us can make the home buying process smoother, less stressful, and more successful. They can provide you with guidance and support throughout the process and help you find your dream home.
Bottom Line
Even though there aren’t a lot of homes for sale today, new home inventory is on the rise, and many builders are offering incentives. Let’s connect so we can help you weigh the pros and cons of shopping for a new home versus an existing one.
Questions? We’re easy to reach! Connect via Zoom, send us a message through our contact form, email us, call us at 949-285-1207, shoot us a text. And don’t forget to download our FREE Mobile Android & iOS App.