Clients/friends of ours have made it a habit to buy a new home every 5 years, about the same amount of time many folks would buy a new car. They seemed to always be on the lookout for the next best Northeast valley community to spring up. When it did, they were right at that new home community sales office trailer when lots became available to reserve, and most often would be able to get a great lot.
April of 2005 saw the lowest supply of available homes for sale at .9 (less than a 1 month supply). Three years later in February of 2008, the supply of homes for sale would soar beyond 20 months. A 2100% increase. That is not a typo. Today, though not a historic low, it’s darn close. No August since 2005 has had less of a monthly supply of available homes for sale
With the current scarcity of existing homes for sale should buyers consider buying a new build? Or is resale the preferred course?
With Caveats. Big caveats. Buyers should consider a new build.
The benefits of buying new vs older:
- Duh, it’s new! You can select EVERYTHING you want in a floorplan you want in a community you want, like gas cooking, extra garage, casita (some builders), flooring, finishes, appliances, counters and cabinets, etc.
- Builder warranty
- Reduced and stable annual maintenance cost in the first years of the home
- Can have time to sell your existing home with perhaps just one move
- No bidding wars
The downside of new vs older:
- Typically higher cost per square foot
- Typically smaller lots than older homes
- Location of new-build communities are “further out.”
- You’ll be living in a construction zone for months and in some cases years
- Kids schools are newer, perhaps untested
- 7+ Months to build the house unless you buy a “spec.” A “spec” is built new by the builder with the intention to immediately sell it – often because a previous buyer backed out of a deal after the home was mostly built, or the builder is completing the community and is moving on and they have just a few empty lots remaining, so they “spec it.”
If interested, there are two very important pre-cautions we need to give you about new home communities:
- New Home Community pricing quoted on billboards, Realtor MLS, all media, and builder marketing materials are base prices only and include no “extras.” Like new cars, advertisements show the lowest possible price.
- You should have a Realtor professional show you these communities, at least the first time through them because if you don’t, you will not have Realtor representation. The attractive and bubbly blond agent you meet at the new home sales office is not representing you. But the builder only. The new home buyer is un-represented. The good news for you is that as your Realtor Professional we can accompany you, and be an extra set of ears and eyes representing you only. The cost to you? Zero. And you can’t buy the home for less because we don’t represent you either. That’s a myth.
We’ll talk more about new home pricing in an upcoming snapshot.