Why Now Might Be Your Best Opportunity to Buy a New Construction Home
- New construction homes offer many benefits.
- While these properties can be more expensive than homes that were previously lived in, right now, you might be able to land a bargain.
- Homebuilders are lowering their prices due to market changes.
You might get a better deal than expected.
There's a very clear upside to owning new construction -- the opportunity to purchase a home no one has lived in before. At the very least, that means getting a home in pristine condition. And in some cases, it could mean getting to customize certain features of your home -- for example, getting to choose what flooring you want in your living room and what wall colors you want in your bedrooms.
Also, when you buy new construction, you can usually rest assured you won't face hefty repair costs for at least a couple of years. That's because new construction homes commonly come with warranties, and newly installed appliances generally have their own guarantees for a number of years, too.
But there's a very clear downside to new construction -- the cost. You'll often pay a premium to buy a newly built home, and that could leave you on the hook for a very expensive mortgage.
But recently, new construction prices have been coming down. And so if you're interested in owning a newly built home, now could be the right time to move forward.
Homebuilder sentiment is waning
Homebuilders are losing confidence in the housing market -- and they're lowering their prices to reflect that. A big part of the reason demand for new construction is dipping is that mortgage rates have been on the rise. That, plus the generally higher price of new construction, has been making it a less appealing choice for buyers.
Now to be clear, it's not that builders want to lower their prices -- it's that many feel compelled to. But you, as a buyer, might land in a great position to capitalize on builders' fears by snagging a great deal on a home that's newly built.
Beware the hidden costs
You're probably aware that a new construction home will generally cost more than a comparably sized existing one. But you should also know that when you buy new construction, there are certain costs you might have to bear.
First of all, if you sign a contract that allows you to customize portions of your home, you could end up spending a lot on upgrades (whereas when you renovate an existing home, you have more options for pricing out upgrades and shopping around with different contractors). Plus, new construction contracts often contain an escalation clause. That allows builders to pass the higher costs they incur in the construction process on to you.
Finally, new construction homes don't always include certain features you'd expect to find in a home, like window treatments. The cost of filling those things in could amount to thousands, and when you're already paying up for a home, that becomes a problem.
All told, now happens to be a good time to look at buying new construction. But before you start talking to builders, read up on some of the added costs you might face and make sure you're able to manage them. The last thing you want is to get in over your head and spend more than you can comfortably afford on your new home.
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