In today’s housing market, there are two main challenges impacting buyers: increased mortgage rates, and rising home prices caused by low inventory. With new construction homes making up a historically large percentage of the total available inventory home search for many of our clients includes new construction homes!
“What I’m finding in this market right now especially with the shortage of inventory is it’s taking your clients 9 to 12 months to find a home anyway. You can put them in new construction today and by the they would have found a home they could have a completed new home.”CEO / Broker Darin Marques at Virtue Real Estate Group.
According to Marques, the majority of inventory that is in the MLS now is new construction. We are up around 3,000 homes on the market about 25% of that are new construction and the other 50-60% are homes built prior to 2005 and they are all dated. So the real challenge in this market is finding something that is more modern and contemporary style homes that are currently in style.
I’ve also found former buyers of resale who make renovations to update their home end up wishing they just purchased new construction due to the high cost and inconvenience of remodeling. I always recall an open house at Prado, A BH Nexus community. A neighbor who stopped in told me he wished he knew about the community beforehand as he had moved from California, bought a resale and spent $1,000,000 in renovations. According to Marques.
People Are Spending Less on Newly Built Homes
The graph below uses the latest information from the Census to show, in June, more of the newly built home sales in this country were in lower price ranges than in 2022:
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Last year, only 58% of newly built home sales were less than $500,000. This June, that number was up to 65%. This means more people are buying less expensive newly built homes right now while affordability remains a challenge in the resale market.
Builders Are Offering Encouraging Incentives
Builders have picked up on this trend and are reacting accordingly. George Ratiu, Chief Economist at Keeping Current Matters, explains:
“Builders are also responding to this shift by bringing slightly smaller homes to market in an effort to meet lower price points . . .”
New data from the Census further confirms this pattern – it shows the median sales price of newly built homes has dipped down in recent months (see graph below):
And as Mikaela Arroyo, Director of the New Home Trends Institute at John Burns Real Estate Consulting, says, the builders who are most responsive to this trend are forming pathways to homeownership:
“. . . it is creating opportunities for people to be able to afford an entry-level home in an area. . . . if you get that size down, that automatically will make it a more affordable home. The [builders] that are decreasing [size] the most are probably the ones that try to build more of an affordable product.”
How I Can Help
Builders producing more affordable newly built homes give you more options at a time when that’s really needed. If you’re hoping to buy a home soon, connect with me to find out what’s available in your area. As your new home advisor I can help you search the newest up and coming communities, shop incentives and help you review the incentives and options allowing you to get the best deal.
Bottom Line
If you’re having a hard time finding a home you like then it may be the right time to consider new construction. As a real estate professional who knows all about the latest inventory in the area, including homes still under construction, just built and coming soon. This way you have an expert on your side who can provide information on builder reputations, builder contracts and negotiations, and more to help you with the homebuying process.
Connect with me to learn more!
Email: [email protected].
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