Buying a home this spring? You may be dealing with current affordability issues and a limited number of homes for sale. But what if there was a solution that could help with both?
If you’re having trouble finding a home you like and mortgage rates are straining your budget, it’s time to look at new construction homes. That is why.
New home construction is a bright spot in the inventory industry.
When looking for a home, you can choose between existing homes (already built or previously owned) and newly built homes. Although the number of homes for sale is up this year, there are still fewer affordable homes compared to a typical housing market year such as 2018 or 2019.
So if you want to expand your options even further, it may be worth upgrading to a new build property. Danielle Hale, chief economist at Realtor.com, explains:
“The shortage of existing homes For Sale has opened up the possibility of new-home construction to more buyers who may not have once considered it.”
The good news is that there are new construction homes to choose from these days. The chart below uses Census data to show how new home building is growing in two key areas (see the latest green growth).
There has been a significant increase in housing starts by beginners or builders in recent years. Home construction that builders have just completed also increased significantly. So whether you want a new home to move into right away, or you want to move in early and adjust the build as you go, you now have more options.
Builders offer incentives that help with affordability.
To sweeten the pot, builders are now offering things like mortgage buybacks and other homebuyer discounts. This will help you solve your current affordability issues while getting your dream home. Mark Fleming, chief economist at First American, explains that builders can offer more options than the average homeowner.
“Builders aren’t rate locked-in. They would love to sell you the home because they’re not living in it. It costs money not to sell the home. And many of the public home builders have said in their earnings calls that they are not going to be pulling back on incentives, especially the mortgage rate buydown, so that will help the new-home market continue to perform well in the spring home-buying season.”
An article from HousingWire also says this about what builders are offering right now:
“. . . the use of sales incentives still shows some momentum as 60% of respondents reported using them, up from 58% in February. “
Buying from a builder is different than buying from a home seller, so it’s important to work with a local real estate agent. Construction contracts can be complex. A trusted representative will be your advocate throughout the process.
They can advise on build quality and builder reputation, review and negotiate contracts to get the best deal, and help determine which alterations and upgrades are the most cost-effective. This is the point of contact for receiving.
