The Pros and Cons of Buying a New Construction Home
Home construction has picked up steam in recent months, and experts largely expect that continue.
Fannie Mae, for example, predicts that housing starts will jump by 6.7% in 2021. The Mortgage Bankers Associations also sees strong single-family construction numbers for next year — the highest in several years, in fact.
For hopeful homebuyers, it’s good news, especially in the face of dwindling housing inventory and rising home prices.
Of course, buying new isn’t always ideal. As with anything, it has its pros and cons. Are you considering a new construction property? Just not sure where you stand? Here’s what you’ll want to think about before you do.
Pros of new construction
1. The home will likely have fewer problems.
Never lived in and brand-spanking-new, you’ll probably have fewer issues and repairs in the first few years. That means fewer costs, too. (You still need a home inspection, though!)
2. You might be able to customize it.
If you get in early enough in a home’s build, you can usually customize the property to your liking. There may even be upgrades you can choose from, like a smart home package or covered patio.
3. You might get a warranty with it.
Many builders include at least a one-year warranty with new builds. If anything goes awry in that time, they’ll come out and fix it, free of charge.
4. You don’t need an agent.
There’s no reason to use a real estate agent if you’re buying new construction. In fact, it could cost you more in the long run (builders are less likely to cut deals with you if you have an agent, since they have to cover that commission).
5. It will probably be more energy efficient.
New homes are built using the latest technologies and building materials, and there’s usually a lot of effort put into making them as efficient as possible. For you, that means three things: a home that’s easier to cool and heat (i.e., more comfortable); a reduced environmental footprint; and lower energy bills to boot.
6. It will be move-in ready.
With a pre-existing home, you’d probably need to do some repainting and minor updates before moving into the property, especially if it’s on the older side. New construction, though? That’s almost always move-in ready. Just pack up your stuff, and move on in — no elbow grease necessary.
Cons of new construction
1. It might cost more.
Unless you’re willing to get a smaller home or compromise on location, you’ll probably pay more for a new construction property when compared with an existing one.
2. Your neighborhood might be a mess — at least for a while.
It can take years for a builder to finish out a neighborhood. If you’re one of the first to buy in, that might mean a lot of construction (and construction noise) in and around your home for quite a while.
3. There could be delays.
New builds can be delayed easily. If it rains, there’s a shortage of contractors, or materials are hard to come by, it could throw your home’s construction — and your plans — off track.
4. You’ll probably need to live a bit off the beaten path.
New construction neighborhoods are often built a bit away from the city, in the suburbs or even beyond. If you’re really early into the community, there might not be much in the way of amenities (even grocery stores, for example), and schools and businesses may be a bit of a drive. (Once the neighborhood is more established, businesses will usually start moving into the area.)
5. You won’t have much shade.
This seems minor, but if you’re in a hotter climate, it can make a big difference. New construction lots are typically cleared entirely before the home is built. While you may get a small, newly planted tree in your yard, it’s unlikely you have any real shade for many years — even decades — to come.
6. Your lot may be smaller.
Most new neighborhoods are built to maximize the number of houses that can go in. Usually, this means smaller lots and less exterior space. Unless you’re one of the lucky buyers to snag a cul-de-sac lot, you’ll probably want to look to existing inventory if a big-sized yard is on your radar.
Considering a new build?
Are you considering buying a new construction home? Then get in touch with an Embrace Home Loans team member today. They can walk you through your financing as well as help you get Approved to Move™. Being Approved to Move™ means you’ll know what budget you’re working with and will also give you some clout in the eyes of your builder.