If you're looking to buy a home and you would really like to get something in escrow before the end of the year, you might be facing a "slim pickens" situation. Inventory issues have plagued the market for several years, and despite a positive real estate outlook, the lack of homes has kept many buyers out of the game.
That's one of the reasons home buyers have been choosing new U.S. homes. They jumped last month to the highest level since October 2007, “a sign that Americans — unable to find existing homes — are turning to new construction,” said USA Today. “New home sales leapt 18.9% in September to a seasonally adjusted annual rate of 667,000, the most in a decade. Sales rose in all regions including the South, where they increased nearly 26%.”
Existing home inventory isn't expected to get better until at least the last half of 2018. So, if a brand new home is something you'd consider, think about this: the next two weeks could be the best time to buy all year.
Builders are especially motivated to move their homes this time of year so they can get them off the books. Be sure to ask in the sales office about "featured" plans or homes, which may may mean the builder is willing to work with buyers to get these particular homes sold. While that may not mean a discount on the price, builders will often throw in upgrades that make them more attractive.
"A lot of the national builders are publicly traded companies. They need to meet sales goals and answer to the shareholders of that company," said Inman. "For that reason, toward the end of a quarter, builders tend to be more aggressive with their incentives in order to meet these sales goals. The December holiday season is another great time to buy. Most of the country is out shopping and traveling to see family. Very few people shop for homes this time of the year. For that reason, 'tis the season to find some great incentives to purchase a new home."
Many builders also offer thousands of dollars in incentives to buyers who choose to get their loan through the builder's preferred lender. Those incentives mean "it actually may be less expensive to buy a new home than a resale," Ron Sozio, builder client relationship manager at Wells Fargo in Somerville, N.J., told New Home Source.
Those builder incentives can include closing costs and/or a buy-down of your interest rate, and can be as much as two or three percent of either the sales price or the loan amount - be sure to ask which one so you have a clear understanding of what you're paying.
Want more reasons to look at a new construction home? How about the fact that it's brand new, never been lived in, and reflects your needs, taste, and style? Or, there's this: If you can find an existing home in your price range and your target area, it's likely not going to be updated, which means you're going to have to spend time and money getting it to where you want it to be, or live with someone else's choices.
If you are going to go look for new construction homes, make sure you bring your real estate agent to ensure you get the best deal. "Some buyers don't feel a real estate agent is necessary when building a new home. They think that because there is a sales agent on-site they don't need to bring in anyone else, right? Wrong," said The Goodhart Group.
"This mistake could cost you. That on-site person works for and represents the seller. A real estate agent will work on your behalf. A good one will know what questions to ask that can get you a sizable closing cost credit from the seller. Not to mention -- a seasoned agent will know how to negotiate the contract for upgrades and finishes that don't come standard with the home. Perhaps most important is the fact that you don't pay for the real estate agent's service. "The builder pays YOUR agent's commission so it costs you nothing to have someone represent you during the new construction process."