Last Friday, two of my clients signed contracts on new construction homes.
One was lucky and got the last market home in their preferred MI subdivision.
The other couple missed out on an inventory home they really liked. It was snatched up by another buyer the morning of their appointment with the builder.
They quickly decided to build new instead and were able to save $25,000 on the last remaining contract Fischer Homes signed in the month of February.
In today’s super-low inventory housing market even new construction has become competitive.
Here’s what you need to know:
Limited Capacity
Many builders are limiting the number of contracts they sign each month in a new subdivision. The reason is simple. Their capacity is limited in terms of qualified workers and the supply of building materials.
Once the 3 or 4 new contracts per subdivision are committed for, you will have to get in line and wait for the next month’s releases.
Rising Costs
Builders are raising the prices of new homes every month.
By signing their contract before the end of February, my clients avoided a $25,000 increase on the base price of the home they are building. It’s not only the base price that goes up. The cost of options is rising too, by 5 to 10%.
The price hikes are caused by higher contractor wages and the ever-increasing cost of building materials. Lumber prices were up by 140% in the past 12 months.
Risk of Higher Interest Rates
It takes 8 to 10 months to build a new home. There’s a good chance mortgage interest rates will rise this year. The 30-year rate has inched up to 3.1% in the past week.
Unfortunately, you can’t lock in your rate when you sign the contract for a new home. You will have to wait until 60 days before closing for a rate lock.
If You Want to Build or Buy a New Home
- Know exactly what you want, how much you can spend, and which area or subdivision you want to live in.
- Act quickly when you see the right home – don’t wait until the end of the month.
- Buy an inventory home if your favorite builder has one available.
Most importantly …
Call me at (614) 975-9650 before you talk to a builder!
Unrepresented buyers are at the mercy of the sales agent who’s working for the builder.
I am representing YOU! I will help you make the right decision and ease the pressure when you have to decide on the largest purchase of your life.
Any Questions about Buying or Building? Call or Text me Today at (614) 975-9650.