Posted October 20, 2022 in Blog / Education
Should I Buy a New Construction Home?
It’s no secret the cost to build a home has increased. The cost per square foot has continuously increased and most notably during the pandemic. The pandemic in 2020 and 2021 caused supply issues due to manufacturing and the cost of many building materials soared. Later we witnessed supply issues due to demand. Combine the demand with increasing interest rates and affordability put the glut of frustrated homebuyers on the sidelines. The housing environment gave shoppers the impression that new construction was out of reach….but…hold on…there is a new opportunity for homebuyers!!!
Most of us are familiar with the laws of supply and demand.
If the supply stays the same and demand increases, the price will go up. If the supply stays the same and demand decreases, the price will go down.
Several large construction companies continued to build homes amidst the lull in demand and the rise in interest rates. Those builders are now sitting on lots of new homes and much more eager to sell than they were 3-6 months ago.
Couple the builder’s willingness to negotiate along with some creative financing such as a seller funded 2-1 buydown and you have a recipe to buy a home with some money left in your pocket and an affordable payment for the first couple of years. Most economists agree an opportunity to refinance in the 4s is a very real scenario by the end of 2023.
This opportunity is real, however, short-lived. As previously mentioned, rates are expected to lower significantly in 2023, which means the demand for new construction houses will return. The law of supply and demand will again favor the seller. Don’t miss out on a tremendous opportunity to buy a new construction home in Q4 2022!!!
Branch Operations Manager
Fairway Heartland Branch