With inventory low in many markets, homebuyers are considering new builds more than ever before. But are they right for you?
If you love to watch HGTV, most of the houses you see people hunting are resales--homes that have been built by and owned by other families. Much of the drama in these shows (think House Hunters) derives from the terrible taste in home decor of the previous occupants and whether the new couple can overcome the "hardship" of an ugly paint color or unattractive carpet.
But with many markets across Idaho, and the country, experiencing inventory shortages, it’s becoming harder for buyers to find a home they love in many neighborhoods. That’s why more and more homeowners are turning to new construction. In Boise alone, single-family construction is up 72% over the last three years.
All New Construction Is Not Created Equal
When we talk about new homes, there are a couple of different types to keep in mind. Some new construction is large-scale development of a subdivision by a particular builder and involves standardized floor plans built with only minor modifications throughout the neighborhood.
In many of these areas, there are a few home styles that are repeated throughout the neighborhood. While you’ll have some leeway in customizing details of finishes and materials, you will pay a premium for any deviation from the standard builder model.
Other new construction involves a custom build, with an architect supervising some or all of the process. This offers far greater customization and also allows you to build on a homesite you choose, rather than in a clear-cut lot in a newly constructed development. That also allows for more mature landscaping and vegetation to be integrated into the new home’s design, avoiding the postage stamp lawns prevalent in some communities. It also means that you can modify the plan down to the last detail to make the space look and function perfectly for your family.
Advantages and Drawbacks of New Construction
Many people love the idea of a new home, if for no other reason than the fact that they’ll be moving into a totally clean, new space. Modern features and the ability to customize elements of the design is also draw, as well as the tendency for new construction to have more energy efficient and technology-friendly features integrated directly into their design.
However, new construction can present challenges as well. If you are operating on a tight timeline for your closing, construction delays can impact your move-in date significantly. An unexpected storm or cold snap can wreak havoc with schedules, and a backup plan is almost always necessary. Even without a delay, you are looking at seven to twelve months build time, double that for custom construction.
Also, the very availability of custom options in new construction can drive budgets to the breaking point. When you can choose upgrades to multiple elements, they’re difficult to resist. The temptation is to plan for the way you live now, without a long-term perspective on features you might want down the road, or what might be appealing to a future buyer.
Advantages and Drawbacks of an Existing Home Purchase
One of the biggest advantages of buying an older home is they are often in established neighborhoods, giving you some idea of what the area will be like before you move in. This isn’t always the case with a newly constructed community where everyone is new and has their own idea of what are and are not acceptable maintenance and appearance standards.
Purchases of existing homes make up the majority of real estate transactions, and one of the reasons is a clear and predictable closing process. Barring a problematic home inspection or appraisal, most existing homes can close in as little as 30 days or even less in the event of a cash purchase.
If you’re looking for a bargain, you may be better off buying an existing home. New construction leaves very little room for negotiation, while a smart and patient buyer can pick up a home for well under market value either by buying during a slow time of year, from a motivated seller, or through short sale or foreclosure.
One of the drawbacks of purchasing an existing home is that it will almost certainly not align with your taste in every respect. Even if you love the house, there will be aspects that you’ll want to change. If they’re minor, that may not be a problem, but major elements like a kitchen that isn't functional or lack of storage space can be both a pain day-to-day and require expensive renovation or repairs.
Maintenance can be a concern with an older home as well, especially if it hasn’t been adequately maintained by previous owners. Knowing the age of the systems and significant elements in the property and bringing in a thorough and knowledgeable home inspector can help to foresee problems during the negotiation process. A home warranty can provide inexpensive protection against expensive repairs.