Among the most-watched economic figures each month are new-home sales. To many, these is a simple statistic upon which models are built, stocks are sold, and decisions are made. However, each one of the 433,000 new homes the United States is on pace to build this year is more than a statistic; to someone, it's their dream.
My wife and I realized this dream just over a month ago when we moved into a new home built by PulteGroup (NYSE:PHM). While our home is as close to a dream home as we could reasonably afford, not everything about moving into a new community is dreamy. Those considering building a new home should be aware of some of the pitfalls of turning your dream into a reality, so you can be fully prepared for what lies ahead.
The grass is always greener...
Everything about a new home is new, including the lawn. A newly sodded lawn needs to be babied. It needs to be watered much more frequently than an established yard, which can typically survive on rainfall alone. For us, rainfall has been rather scarce since we moved into the house.
That meant I was outside virtually every day moving the sprinklers and cursing the weatherman for promising rain that never came. Needless to say, those moving into a newly constructed home need to budget time every day to make sure the lawn is watered, though that doesn't mean it will actually quickly turn into a luscious green.
While it's a highly crafted product, it's still a manufactured good
Every dream home comes with high expectations that the world will be a better place when you move in. That dream, however, can take a few lumps along the way when, say, the toilet breaks in the first week or the drawer falls off a kitchen cabinet.
It's situations like these where the builder really matters, and in our case, PulteGroup has done a phenomenal job righting any wrongs. This is why homebuyers must make sure they completely understand what the builder will and won't do after it turns over the keys. Warranties and customer service can vary a great deal between companies, so it's imperative to choose the right builder so your dream home doesn't turn into a nightmare.
Booms aren't quiet
New communities are more like construction zones at first. They can come with quite a number of extra hassles, such as construction traffic that blocks every entrance to your home, or construction workers who do not respect the boundary between private property and the lot they are working on, or even the unsightly portable toilet that sits right outside your front window. Not to mention the lovely pre-dawn wake-up call as the refuse company unloads the construction Dumpster across the street every single morning.
In a boom community like ours, construction can continue from first light until late in the evenings for six to seven days a week. That means your neighborhood might need a few months, or even years, to become the nice, quiet community that was expected. This takes some getting used to, with the light at the end of the tunnel being the thought that it will look great when it's done.
It can still be well worth it in the end
While there are a number of downsides to living in a community still under construction, it's still well worth it in the end. Sure, the place can be crawling with construction workers, but building my home created their jobs. In fact, the National Association of Home Builders says 2.97 jobs are created for every new home built. That's a statistic to be proud of these days, when job creation is low.
Furthermore, the average new home today is 30% more energy efficient than an existing home, and many can be upgraded to be even more efficient. The energy costs of our home are about 15% less than our former apartment, even though it's nearly twice the size. Those savings will add up over the years.
Then, of course, there is the feeling of joy and the sense of accomplishment watching the dream come to life. That is amplified by the enjoyment of living in the home, knowing we built this (or at least created the jobs that built it). So while living in a new development certainly has its pitfalls, the joy of living in that dream home can make these minor inconveniences quickly fade.
Will this stock be your next multibagger?
Give us five minutes and we'll show how you could own the best stock for 2014. Every year, The Motley Fool's chief investment officer hand-picks one stock with outstanding potential. But it's not just any run-of-the-mill company. It's a stock perfectly positioned to cash in on one of the upcoming year's most lucrative trends. Last year his pick skyrocketed 134%. And previous top picks have gained upwards of 908%, 1,252% and 1,303% over the subsequent years! Believe me, you don't want to miss what could be his biggest winner yet! Just click here to download your free copy of "The Motley Fool's Top Stock for 2014" today.
Matt DiLallo owns shares of PulteGroup. Matt DiLallo has the following options: short October 2014 $18 puts on PulteGroup and short October 2014 $20 calls on PulteGroup. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.