If you are already in the market to buy a home, you may know how little inventory is available. And you, in turn, may be tempted to buy a newly built home if you can’t find an existing property for sale that’s right for you. In fact, newly built homes made up 26% of all single-family homes for sale in the first quarter of 2021, according to Redfin. But should we buy a new construction? Here are the pros and cons.
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The advantages of new construction
The advantage of new construction? Have a house that has never been lived in.
When you buy new construction, you get a home in perfect condition, and you also get a home that probably won’t need major repairs for at least a few years from the time you move in. In fact, newly built homes usually come with a warranty, which protects you from manufacturing issues for at least a year. And often, you’ll have extended warranties on individual devices that give you extra protection. (For example, your water heater may have a five-year warranty, just like your air conditioning system.)
Additionally, in some cases, buying new construction means having a say in the actual construction process. You may have the flexibility to choose what type of tile you want in your kitchen, what you want your bathroom cabinets to look like, and what countertop material you end up with. Not only does this mean having a home that truly suits your tastes, it could save you from having to invest money in renovations.
The downside of new construction
The main disadvantage of new construction? The cost involved. Due to a significant shortage of lumber – which is a key material in building homes – an average new home is costing about $ 36,000 more this year than it normally would. It’s not exactly change, and that means you may have to take out a much larger mortgage to finance that home – and face higher monthly payments once you move in.
Another issue you might encounter with new build is substandard quality. The old adage “they don’t build them the way they used to” is known to apply to new builds, although some builders are more famous than others. If you control yours accordingly, you might avoid this problem (especially if you ask your builder to specify in your contract what materials will be used in your home).
Finally, newly constructed homes can be subject to delays. If you are considering a home that is already fully built and ready to move in, this won’t be a problem. But if you’re buying a home that you can customize, don’t be surprised if your closing is delayed. This could prove to be problematic if you find yourself in a situation where your lease expires or if you sell an existing home and need to close it before your newly built home is ready.
With the shortage of existing homes, many buyers today are looking to new construction to fill that void. While this may be a good option for you, be sure to consider the pros and cons before making your decision.