What to expect when buying new construction in 2022?!

For many it’s a dream, not only to buy a home but to build a new home exactly the way YOU want too!! New construction comes with tons of benefits the most obvious that you are the first family living in this space and making it your own. Since they are new you don’t have any old smells, wear and tear, you mostly likely have the most up to date modern styles to chose from and energy efficient appliances, smart home features and a builders warranty.

While still very possible and a dream that can come true, the building process has really changed in the last few years and here’s how it looks in 2022.

Types of Homes

Production homes are homes that are built on large tracts of land that is purchased and developed in a community.
Fully custom homes when you pick everything down to color of the grout between your tiles and the size of every bedroom. These homes are made from scratch to your specifications which is exactly why they are the most expensive of new construction homes.
Semi-custom homes this is when the builders have certain amounts of templates to work from in regards to floor plans and you’re able to move some areas around and make some modest adjustments.
Spec homes are designed and built by the builder with no input from a buyer. These homes are usually quick move-ins for those buyers that don’t want to wait for the drawn out build time that it usually takes from scratch.

What to expect?

Supply is limited in 2022 to find a new construction home just like resale inventory. Some say it’s the local counties that won’t allow for permitting to be approved fast enough and other’s speculate it’s a strategic move by builders to build less homes and profit more. Regardless of the reason, many builder in 2022 don’t have many options, so when looking for new construction it’s important to find out:

Find your area, what builders are building in the area and floor plans that meet your needs.
Find out what up and coming neighborhoods are being built and when.
Find out what prices are starting at for the home and what the costs is for the lot.
Find out what the process for offers is from each builder and neighborhood you are interested in building a home.
What incentives are building offering for closing costs or upgrades and what lenders are they working with.

It’s important to keep track of who you are talking to and the information they are providing, a good real estate agent will help you with this.

Make an Offer

Once you have decided on a builder and floor plan you want to move forward with, it’s time to make an offer. Something to note, is that in today’s market some builders won’t accept offers until the home is further build through the process, which has it’s pros and cons. Pros being you won’t have to wait to long to close and cons being they may have selected features in the home that may not be able to change.

Many builders in this market are collecting a refundable deposit to put you on the waiting list to then receive a call when the home is at a certain stage in building and giving you the starting price and asking you what your offer is. They are accepting highest and best even on new construction which is new in the real estate industry.

Another factor in this market that has changed and become challenging for buyers wanting to buy a new home is rising interest rates. When you are under contract months before closing this doesn’t give you the chance to lock the current interest rate. With the rates going up in 2022 and not locking until 90-120 days from closing time your monthly rate can go up. Not knowing what your monthly payments will be until you are closer to closing time is not fair to buyers and has been a huge factor in buying new construction versus resale. Some lenders are providing the option to lock the rate at a pricey premium with that cost being credited back at closing time. Interest rates rising is an important factor to consider when buying new construction and you will want to find out if this type of rate lock is available and if it is reimbursed at the time of closing.

Cost of Supplies and Delays

Another factor to consider when building in 2022 is the shortage and cost of building supplies can cause delays and longer build time. The other factor is with the higher cost of supplies comes the builders profit margin, most new construction builders have terms in their contract that stimulates that if the costs of materials goes up and it takes away from their profit margins they secure the right to revisit the price of the home with the buyer and your price can increase. Or if you decide not to accept the new price they will typically reimburse you the deposit but this could be after waiting months and months for the home to then find out that the price of the home is going to go up and you may not be able to afford the new costs.

Have we discouraged you yet into buying a new construction home?! We hope not, with clarity comes power and moving forward with new construction can be an exciting venture but proper expectations is critical. And so is being represented by a professional that has your best interest at heart, remember that the site agents work for the builders and doesn’t represent YOU and any promises not in writing aren’t worth a dime and getting your own representation is important especially in today’s new construction market.