Is New Construction a good value in this market?
A great question and one we hear often these days. Of course, the easy and probably the most accurate answer is, it depends. The driving point, builders don’t get paid and can’t pay the bills without selling homes. This very important point translates to builders reacting to current market conditions quicker than the traditional seller. Most often a seller wants or needs to sell their home, but the vast majority of time it is not the difference between putting food on the table or not. Thus, in today’s market you may find a few more “deals” in new construction.
Naturally, you’ll want to do your homework and determine the style, lot size, price range, etc. before buying any home (new or a resale), but just in the zip code of 19428, you will see a range of new construction from the $300,000’s to over $600,000. Many styles and sizes can be found to suit your taste in these price ranges.
But that’s not all. You’ll also want to understand how builders calculate their costs, lot premiums, and profits. Many times builders (internally) will break things down to a per square foot cost. You may see a home advertised for $350,000 with a $10,000 “free” finished basement. This might look appetizing compared to a home advertised at $375,000, but what is the total square footage of the home? What appliances and option packages is the builder including? Are the incentives “tied” to using a certain mortgage company or title company? Is the home certified “green”? When is the projected settlement date and how does that impact my ability to lock-in at today’s low interest rates?
As with any big purchase, the devil is in the details, not in the advertisement.
In short, yes, I would say new construction has the opportunity to provide “good” value as builders are inclined to understand this current market better than an average seller. But, it is imperative to understand the new construction process, the builders’ language, and gain a keen sense of what the product includes and does not include.