13% of Recent Home Buyers Made This Move to Avoid Competition
- The housing market is starved for inventory, making it difficult to buy a home.
- If you can swing the cost of new construction, it's a good way to purchase a home and avoid some of the competition you might otherwise face.
It may be something worth considering yourself.
The housing market has been a competitive one lately. We can thank low inventory levels for that.
Because the real estate market is so starved for homes, property prices have been soaring and bidding wars have been a fixture. But bidding wars can be stressful, and they commonly drive home prices way up. And so a lot of buyers would rather not deal with one.
If you feel the same way, there's another option you can look at -- buying new construction. In a new HomeLight survey, 13% of buyers opted for new construction due to the competitive nature of the housing market. But is a new construction home right for you?
The upside of new construction
When you buy a home that's newly built, you're guaranteed to get a property in pristine condition that won't need any immediate repairs. And in some cases, when you enter a contract to purchase new construction, you get to have a say in the building process. That could mean getting to choose the layout of your home and the number of bathrooms it has, for example. Or, you may not get a say in your home's layout, but your builder may allow you to choose your own flooring, countertops, and fixtures.
The downside of new construction
With new construction, you won't have to worry about moving into a home that needs remodeling. You also won't have to spend money on any immediate repairs.
On the other hand, you're apt to spend more on a new construction home than on an existing one, so you'll need to think about whether a higher mortgage payment will fit comfortably into your budget. And it's not just your mortgage payments that are likely to be higher. Because new construction homes tend to get assessed at higher values than existing homes in comparable shape, you can expect a higher property tax bill -- one that might start out expensive and climb over time.
Furthermore, while you may have the option to customize your new construction home, certain upgrades could end up being very expensive. That's because you'll be stuck working with your builder, and you won't have the option to price out the work with different contractors to see who ends up offering the best deal.
Finally, if you're buying new construction that you have the option to customize, it means you could face delays in the course of the building process. That could prove problematic if your current housing situation isn't flexible -- such as if you're selling a home and need to be out by a certain time, or if you're in a rental whose lease is coming to an end and there's no option to renew.
What's the right call?
If you've been trying to buy a home for months and keep losing out to competing offers, it may be time to look at new construction homes. Just make sure you recognize the pros and cons of going this route -- and also, make sure you can swing the higher costs that could ensue.
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