The Unexpected Costs of New Construction
With interest rates at record lows, demand for homes is soaring across the country. Not surprisingly, home prices are rising in many places as well. The National Association of Homebuilders recently announced that market influences, including the rising cost of lumber, had added more than $16,000 to the average price of single-family homes between April and August of 2020
This can tighten budgets for prospective homebuyers and limit their housing options, especially for those with dreams of a freshly constructed dream home. But buyers shouldn’t be too quick to dismiss the advantages that an existing home can offer, even compared to the reliability and style found in a brand new home.
In most cases, new construction is going to be found in new developments. While the location may be conveniently situated for your needs, they may also be farther from some amenities. Since retail development often lags behind residential growth, the proximity of restaurants, grocery stores, and entertainment options may leave something to be desired compared to more established neighborhoods.
Homebuilders are also looking to maximize their investments, which means new construction homes often sit on smaller lots than their older counterparts. And, if you purchase a home with undeveloped lots nearby, you spend the first years in your home listening to construction noise and looking at the dumpsters and debris that accompany building projects.
Accepting the higher price of a new home may mean sacrificing square footage inside as well as out. Although it may be easier to find an open layout that maximizes the available space, recent events have shown that more separation within a home has its advantages. Buyers who will be working or schooling from home, or those with larger families, may find more rooms and walls to be a blessing once they settle in.
An overlooked disadvantage of new construction is that it may not be as finished as you expected. Some necessities, such as appliances, window blinds, ceiling fans or towel racks and toilet paper holders may not be included in the sales price. You may have to choose between paying expensive upgrade fees to your builder or installing them yourself after move-in.
New construction can also be a missed opportunity to buy a home with improvements you value. If a big ticket item—such as an in-ground swimming pool, outdoor kitchen or an irrigation system—is on your wishlist, it might be wise to consider existing homes. Letting the previous owner foot the bill for these features can be a path to substantial savings.
Whichever direction your home search takes you, start with a lender you can trust to get you through it. Visit OpenMortgage.com for more information about our offerings or call today to speak with a member of our experienced team.