Key considerations for buying new construction in 2022

Many families have seen their savings accounts grow in the last two years as a result of remote working, reduced commuting, and more cooking at home rather than eating out. If that describes you and you’re looking to buy a new house, you might find that new construction fits within your budget for the first time – perhaps for the first time ever. 

True, construction supplies are a little more expensive than they used to be due to supply chain concerns, but that could change shortly. Prices for new home construction materials are expected to stabilize in the next months, triggering a housing boom in 2022, according to industry experts. Builder confidence in the market for newly built single-family homes is high, according to the National Association of Home Builders: it scored an 84 out of 100 in December 2021! 

The Mortgage Bankers Association (MBA) agrees, estimating that single-family housing starts in 2022 will be around 1.13 million. That’ll come close to meeting the present demand for 1.2 million homes. 

5 Things to Consider About New Builds.

Before you go out looking for your own newly built home, have a look at our checklist of things to look for:

1. Be a homebuyer who has been pre-approved. 

Meet with a mortgage loan officer to establish your budget, purchasing power, time frame, potential savings for a downpayment and closing fees. Pre-approval (which carries more weight than pre-qualification) can help you decide whether to take a tour of an available site or pass it up because it’s out of your price range. 

Many home builders will even have mortgage brokers on hand to help. While you are not required to utilize a builder’s preferred lender, it is a good idea to probe their brains about the various new construction loan options available.

Remember that interest rates are still historically low, so shop around. 

2. The “model home” is not a requirement. 

It’s a good idea to tour a model house when looking at newly developed properties. But bear in mind the following: Model homes will have the most up-to-date features and options available. Model homes are usually outfitted with the most expensive amenities that a builder has to offer. While this allows purchasers to visualize the home’s full potential, purchasing all of the extras displayed in the model home may need you to go deeper into your wallet. 

Downgrading to less-expensive “builder grade” materials and finishes can help you stick to your budget, but if you have the funds, go for the middle-range or premium selections. When it comes time to sell, choosing a higher-end design might raise the value of your home. 

3. Ask the difficult questions. 

With new construction, you can’t perform a walk-through of the real area because it’s still being built.Because you can’t walk around the actual place because it hasn’t been created yet, it’s up to you to investigate the area and gather references on the homebuilder before committing. Look online for builder reviews and, if possible, drive by some of their prior projects. 

It’s natural to have questions. Good communication will help you manage your expectations about the process, expenses, and timetables while also ensuring that everything is as transparent as possible. Builders usually enjoy it because having a customer involved in the process reduces misunderstandings and buyer’s regret! To get you started, consider the following topics: 

• What other projects has the contractor worked on? 
• How much of the construction has already been contracted? 
• Who will be our main point of contact during the construction process? 
• Which method of communication do you prefer: phone, email, text, or face-to-face? 
• Which features are included as standard, and which are available as premium upgrades? 
• What happens if a flight is delayed? 
• When will we (or our home inspector) be permitted to enter the house? 

5. It’s all about the timing. 

The time it takes to finish a custom-built home is affected by a number of factors. These include delays in receiving building materials, worker shortages (which are unfortunately becoming more common with the present pandemic status and Great Resignation trend), and weather conditions on the job site. 

The average time it takes to build a new home is 7 to 12 months. This is normally ideal for purchasers who aren’t in a rush, but if you’re selling a home, unknown building timeframes could be a major concern if you’re selling to buy. If you’re still attempting to sell the old house after moving into the new one, you may need a short-term rental, go the Airbnb route, or end up paying two mortgages at the same time. 

One option is to use the model home mentioned before as a workaround. The builder may no longer require the model to stimulate interest after a specific number of units in a development have been sold. It may be put up for sale long before you could get into one built from the ground up. It’s worth a shot, because model homes come with top-of-the-line renovations and are ready to move in. 

6. Inspections, like mistakes, happen. 

A home’s structural integrity is not guaranteed just because it was built from the ground up. Make certain.Before you commit to closing, make sure the one you’re buying has been inspected by a competent specialist. 

Inspections will be handled by the homebuilder, usually through a third-party specialist who is familiar with the local government’s protocols and red tape. In contrast to a pre-owned house sale, where inspections occur solely at the conclusion of the previous owner’s occupancy, you’ll want to employ a professional inspector to inspect the build-out at various phases. 

Before putting up the drywall, have the foundation, wiring, and plumbing inspected. If any work isn’t up to par, the inspector can notify you so you can discuss your issues with the builder and figure out a solution. The property will next be subjected to a final inspection to ensure that it is safe and up to code.

7. Be a confident buyer. 

First and foremost, do not undervalue your purchasing power. Potential first-time homebuyers frequently question if they are financially prepared to purchase a home. They may decide to postpone it for a few years if they do not receive competent counsel and advice. 

The truth is that you could be ready sooner than you think and take advantage of the present new building market if you just knew how to talk to a home financing expert.

If you’re looking for more information about a new construction loan, we would love to connect you with one of our preferred lenders near you. Give us a call today!