There’s no denying that building a new home—rather than buying an existing one—remains popular with homebuyers. In fact, new home construction increased 5.2% on a year-over-year basis last year. New home starts totaled 1.38 million in 2020. That’s an increase of 7% compared to 2019.
If you’re thinking of a new home, you may have given some consideration to new construction, particularly with existing home inventories remaining tight.
The advantages of new construction are obvious. But perhaps less obvious are the drawbacks. That doesn’t mean you shouldn’t build. But, there are certain things to keep in mind when you are considering new construction. Here are the first three questions to ask yourself:
1. Do you have the budget?
There’s no sense in sugarcoating it—new construction will often cost you more than a comparable existing home. This is true not only because of the base price, but due to the tendency for buyers to keep adding to the price with finishes that represent an upgrade.
As your real estate agent, I can do the research to provide you with typical new construction costs. It can be difficult to find a builder below a certain price threshold because margins become thinner.
One option to consider, if you are concerned about your budget, is the availability of a spec home or a home that is only a couple of years old. You may find something closer to your budget, though the trade-off will be the lack of customization you would enjoy if building from the ground up.
2. Do you have the time?
An undeniable fact about new construction is that you are looking at a considerably longer period of time between the day you sign your contract to build and the day you close on your new home.
Having the flexibility—and the patience—to wait months for your home to be complete is not for everyone. Be sure you are in no rush to move if you decide to opt for new construction.
3. Do you have the temperament?
There’s a builder that tells clients, “You’ll love me the day we meet. You’ll hate me in the middle of your build. But, I hope we can be friends on the day we close.” What the builder was trying to convey is that building isn’t for the faint of heart. If you think that you have no worries because you’ve decided on new construction, think again.
Understanding what the builder warranty covers may give some peace of mind. But, it doesn’t help you feel better when construction runs horribly behind the anticipated time line or somehow the wrong cabinets were shipped.
New construction doesn’t mean there won’t be problems. In fact, you can count on it. That’s why it’s still important to do walkthroughs and even have your own inspection done. If you enter the process in the right frame of mind—knowing there will likely be some hiccups along the way—you are less likely to let the stress get the best of you. Just as you would with resale, you will want to engage the help of an expert agent to help take you through the process from start to finish.
Remember to keep your eye on the prize—a wonderful, newly constructed home!
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