Consider a Newly Constructed Home for These Two Compelling Reasons

As you prepare for a relocation, it's natural to ponder your future surroundings and envision your forthcoming residence. Perhaps you have a distinct image of your ideal home. However, unless you initially set out with the intention of purchasing a newly constructed property, you might not have considered the option of new home construction.

An experienced and reliable real estate professional can guide you through a comprehensive exploration of the compelling rationales that might persuade you to reevaluate your stance and give serious consideration to the merits of a newly constructed home.

1. Expanding Your Options with Newly Constructed Homes

Two categories of homes are available in the market: new and existing. A newly constructed home is either recently built or currently under construction, while an existing home has previously been inhabited by a homeowner. Presently, existing home inventory is limited, but there could be viable options for you among newly built properties.

Information from the Census and the National Association of Realtors (NAR) indicates that newly constructed homes constitute a larger portion of the current housing inventory compared to the typical distribution, as illustrated in the graph below:

Between 1983 and 2019, which marked the last typical year in the market, newly constructed homes accounted for merely 13% of the overall inventory of homes available for sale. However, at present, that figure has surged to surpass 33%.

Be assured, despite more than a decade of insufficient construction, builders are not currently overextending themselves. Despite the rise in new construction, there remains a substantial shortage of housing overall. However, for you, the increase in new builds can represent a significant opportunity, providing you with a broader array of options for your search.

2. Newly Constructed Homes Might Offer Greater Affordability Than Expected

You might still be questioning whether a newly constructed home could genuinely be within your reach. If you've dismissed them in the past assuming they would exceed your budget, think again. The price disparity between a newly built home and an existing one is narrowing. Here's the reason behind it.

Builders are responsive to market demands, and they recognize the current pressing need for a broader range of options, particularly those that are more compact and potentially more affordable. Consequently, their efforts are concentrated on constructing smaller residences at lower price points. The accompanying graphical representation illustrates how the price disparity between newly constructed and previously owned homes is progressively diminishing as a result of this strategic shift in the building industry's focus.

As LendingTree explains:

"Previously, newly constructed homes carried a significantly higher price tag compared to existing ones. However, in recent times, this price differential has been decreasing. In certain locations, you might discover that the cost of building versus buying is now approximately equal."

And an article from CNBC says:

"Although newly constructed homes still command slightly higher prices than existing ones, the difference in price has notably diminished..."

It's worth noting that some builders are even offering incentives such as price reductions and mortgage rate buy-downs to enhance the appeal of their offerings. In the current market landscape, numerous compelling factors exist that render newly constructed homes worthy of serious consideration. Other prospective buyers seem to share this perspective, as evidenced by the observation made by Freddie Mac:

"With the persistently low supply of existing homes for sale and the ongoing increase in home prices, an increasing number of buyers are opting to invest in new homes compared to previous years."

Keep in mind that purchasing a newly constructed home differs from buying an existing one, as builder contracts entail distinct details. Therefore, collaborate with a knowledgeable local agent who understands the market, builder reputations, and the nuances of these contracts. By doing so, you'll have an expert by your side to guide you through exploring this option.

Bottom Line

To gain insights into the activities and offerings of builders within your local area, it is advisable to establish a connection with a knowledgeable real estate professional. Furthermore, if you are open to expanding your search parameters and exploring a broader range of possibilities, your agent can guide you through the process of extending your investigation to encompass neighboring towns and communities. This comprehensive approach may unveil additional viable options that align with your preferences and requirements.