Want To Build Your Own House? The Pros, Cons, and Costs

Building a brand-new home may sound like a dream come true. You get to choose the ideal layout for your family’s needs, and have a say in each and every design element. However, the process may also be daunting if you’ve never done it before.

To help you through it, we’ve created this Guide To Building Your Own Home. It will provide all the detailed information you need at each stage of the home-building process so that everything goes as smoothly as possible.

In this first article, we’ll offer a glimpse into the pros and cons of building a house, including how much it costs, how long it takes, how it’s financed, and much more that will help you decide if this option is right for you.

Pro: You can get exactly what you want

Building a home is a popular option these days. Construction on single-family homes was up 10% in November 2020 compared with the previous year, according to the National Association of Home Builders. And, it makes sense: When you build your own home, you get exactly what you want: an in-law suite for when the grandparents visit, a decked-out office for working from home, midcentury modern style, and more. Anything is possible.

“You get a blank slate,” says Marc Rousso, CEO of JayMarc Homes in Seattle. “The fun part about building a custom home is that it can be whatever you want.”

That might sound overwhelming, so Rousso suggests starting with a vision board. Check out websites like Houzz or Pinterest, and drive around snapping photos of homes you like. Then think through how big you want the home to be, how many bedrooms and bathrooms you need, and the bonus spaces you want to live as comfortably as possible.

The best way to make sure you get what you want (and that it fits within your budget): Hire a great builder from the start. This crucial step sets the best possible foundation (in every sense of the word) for your new home. Builders help you select others on your team (such as an architect, interior designer, and landscaper) and serve as your point person throughout the process.

Not sure how find a homebuilder? NAHB offers an online directory, and its members are committed to ongoing education and ethical standards. Hiring builders who have been in business for several years is also a plus, as they’ve proven they can weather both the highs and lows of economic cycles.

Pro: You can build just about anywhere you want

Have you always dreamed of living by the water or having a mountain view? Or maybe you want no neighbors in sight? Building a home lets you set up your residence just about anywhere you want.

Talk to your builder before making a land purchase, though, Rousso urges. The builder will need to do a feasibility study on the land to make sure it’s a suitable place for the home you want to build.

“We’ve talked more people out of buying land than into buying land, because there are so many pitfalls,” he explains.

Builders help make sure the land is zoned for residential development and identify any issues with building on the site, such as connecting to utilities or developing the land before building can start.

Another thing to note: Land development can be costly. HomeAdvisor estimates it to be $1.30 to $2 per square foot of land, including surveying, drainage plans, utility and septic mapping, permits, soil testing, land clearing, excavation, and demolishing any existing structures.

Pro: New homes typically come with less maintenance

An obvious advantage of building a home is that everything is brand-new. That means maintenance and repairs will be minimal or even nonexistent for a while, saving you plenty of headaches and thousands of dollars a year. According to HomeAdvisor, in 2020, homeowners spent an average of about $3,200 on home maintenance.

Nonetheless, a new house isn’t entirely maintenance-free. You’ll probably still need to do yardwork to keep up your newly installed landscaping. And you may want to pay for some preventive upkeep, such as a maintenance contract on your HVAC system, costing $150 to $500 a year. But that could save you money in the long run.

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Watch: How Much a Home Inspection Costs—and Why You Need One

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Con: Building usually costs more than buying an existing home

Building a house is an expensive enterprise, and typically costs more than buying a preexisting home. As such, you’ll need to have some in-depth discussions with your builder on what you want, and whether it’s affordable for you.

“A builder can help guide the design process starting with schematic design to give the prospective client an idea of the budget,” says Tim Benkowski, senior project manager at Balsitis Contracting in Lake Geneva, WI. “That way, design revisions can be made early without the owner falling in love with a home design only to find out they need to cut out their favorite parts or reduce the project scope.”

Several factors determine how much your newly constructed home will cost: location, size, complexity, and design elements.

The NAHB estimates that the median price of constructing a single-family home is $289,415, or $103 per square foot. Labor typically constitutes about 40% of the cost, followed by permits, design fees, and materials. Here’s more on how much it costs to build a house.

Con: Getting a construction loan can be complicated

To finance building a home, you’ll need a construction loan, which is a little more involved than getting a traditional mortgage to buy a preexisting house, says Steve Kaminski, head of residential lending at TD Bank.

For starters, you’ll likely need a 20% down payment since construction loans are considered higher-risk. Along with the usual financial documents needed for your loan application, you need to provide project plans, costs, and land value. You also need a signed contract or purchase contract with the project’s plans, specs, and budget details, and a timeline for the construction.

“The lender is not only evaluating the borrower, but also the project plans and oftentimes the builder to ensure they will be financially solvent throughout construction,” Kaminski explains.

Construction loans are usually shorter-term, covering just the duration of the build, and may have higher interest rates, usually about 1% higher than conventional mortgages, according to the Consumer Financial Protection Bureau.

Once the home is completed, you can pay off the balance or convert the loan to a conventional mortgage. The interest rate and the type and terms of the mortgage will depend on your credit history and lender.

When shopping around for a mortgage for a new home build, Kaminski urges borrowers to go with a lender experienced in working with construction loans.

Con: Building a home takes a while

Generally, it takes a bare minimum of three months to build a simple house, and it can take much longer. But it’s a “sliding scale,” says Benkowski. “A 2,500-square-foot and under [home] can typically be completed in seven to nine months with proper planning. A 7,500-square-foot home and up would likely take 12 to 30 months.”

Planning as much as you can will keep the project on track. Still, delays do happen. Weather is the biggest one, with temperature shifts and rain or snow postponing work. Your own choices could also be to blame. If you’re taking too long to choose your favorite flooring or windows, it could make it all take a little longer.

Here’s more on how long it takes to build a house.

In the next installments, we’ll cover how to buy land, design tips, the ins and outs of mortgages for home construction, and lots more.

Source: realtor.com

Buying Land to Build a House

Buying Land to Build a House

So many people imagine building their dream home in an ideal location. Finding that location and buying land to build a house is the first step in fulfilling this dream. 

Paying for this lot with cash is the ideal scenario but with lot prices climbing into the hundreds of thousands of dollars range, most buyers will need a loan to purchase a lot. 

The loan you use for buying land to build a house on is very different than the traditional home mortgage loan. Land loans differ because there are generally no improvements like a house on the property. On a traditional mortgage, the home is used to secure the loan. In a land scenario, there are no improvements to use in order to secure the loan. 

This makes the land loan a risky loan for the bank. Because of this, these loans have more stringent requirements than traditional mortgages. You’ll need more money down 20% to 30% depending on your credit score.

Yes, these loans can be difficult to obtain because of the requirements but at the end of the day, it’s worth the hassle because you’ll enjoy plenty of benefits when you do so. Before you even start thinking about them all, you need to do a lot of research. Don’t worry! We’ve done it for you!

Here’s everything you need to know about purchasing land before building your house.

Reasons to Look for Land to Build on

Privacy: Living in an urban or even a suburban neighborhood usually means a lack of privacy. You see and hear your neighbors constantly, and while they may be great people, you want your privacy.

When you buy land to build a house, you have the flexibility of choosing a place the lends itself to seclusion and privacy. Additionally, you have the option of situating your home on the lot in order to maximize your privacy. 

While custom home lots are more extensive than subdivided lots, they also tend to be much larger. This means you’ll have more space surrounding your home, hopefully giving you peace, privacy, and quiet.

Convenience: One of the advantages of buying land is choosing where you’re going to be. That means you can be closer to work, family, or whatever your lifestyle priorities are. 

If convenience is your priority, you may need to be flexible when it comes to designing and building your home. Since communities located close to amenities and other conveniences tend to have more restrictions than more rural communities, you may have to adhere to building restrictions and requirements. This may force you to compromise on the actual type and style of home you end up building.

Style: One of the biggest benefits of building your own home is that you get to choose the style of the home. If you want to build something truly unique, building your own home is the right decision. When you shop for your lot, it’s important that you do your homework in order to make sure you can build what you want. Many communities have architectural guidelines and restrictions that will dictate what you can and cannot build.

When you build your house, you are supposed to get everything that you want. Make sure you buy your lot in an area that has no restrictions or at least restrictions you can live with.

Flexibility: Tract or production builders do a great job of building an attractive product that appeals to a wide range of homebuyers. Unfortunately, not everyone has the same needs and wants. Have you always dreamt about a larger garage, a dedicated workshop, or a cottage? Since you’re in charge of designing the house, you can do it!. You can choose to be practical, extravagant, or something in-between. It’s up to you.

It’s important that you make sure you will have the ability to do the things you want when you choose your building site. You need to make sure the building envelope large enough to accommodate your plans. Also, check to make sure there are no environmental issues that would keep you from executing your plans. We often see large pieces of land that are either too steep or have unbuildable areas because of drainage or some other issue.

The time to find out about these types of conditions is before you close on your lot, not after.

How to Find Land to Build on

Realtor: Your Realtor is a great place to start when looking for land. Realtors often have access to pocket listings, these are lots that are not yet on the market but the owner might be looking to sell.

It’s important to note that realtors tend to specialize in different aspects of the market. A Realtor that specializes in luxury condos in an urban area is probably not a great resource for a custom home lot in a rural or suburban setting. Ask around in order to find realtors that specialize in the type of land you are looking for.

MLS: A Multiple Listing Service (or MLS) is like a realtor’s database, where multiple real estate agents offer both homes and land for sale to each other. Unlike the pocket listing, a property offered on the MLS is there because the owner wants to sell.

Your realtor can set up a search for you on the MLS system. This search will send you notifications when a listing that meets your criteria hits the market. One of the most valuable aspects of this type of search is that the agent can change the search criteria if you aren’t seeing the types of properties you are interested in.

Tax records: If you have a very specific area or neighborhood that you want to live in, this is a great way to search for a lot. Looking at the county tax assessor’s website to locate unimproved properties is how the professionals do it. Builders will often scour the tax records looking for unimproved land. The goal is to find a vacant lot that has been owned for a while, if the owner is out of the area, it’s even better.

Builders will reach out to the owners to see if they have any interest in selling the property. These lots are often owned free and clear, so the only expense to the owner is the property tax. These property owners often don’t even consider selling until someone asks.

This method requires a little detective work and a little bit of hustle but the results can be very rewarding.

Landwatch: Realtors, MLS, and tax records are old-school ways of looking for land. Nowadays, we can take advantage of the internet. And www.landwatch.com is the perfect place to look for land online.

On this website, you’ll find countless land listings from huge agricultural tracts to small parcels. These listings come with descriptions, pictures, pricing, and more. If you like what you see, you can contact the owner and buy it.

Subdivisions: The developers of large subdivisions tend to sell directly to home builders. This is a very efficient method for these developers because the builders buy in bulk and have the financing in place. It’s rare to find a subdivision that sells directly to homeowners, but they do exist. 

Subdivisions that sell directly to private individuals tend to be custom home subdivisions. If you are looking for this type of opportunity, you’ll need to stay on top of the market. Talk to builders and Realtors about where these subdivisions are. If you have already chosen your home builder, they can be a great asset in this search as well.

Important considerations

Rural or Suburban: You probably know the difference between a rural and a suburban setting. When you decide to buy land to build a house, this is a crucial factor.

View: Do you want a view? Or, perhaps, are you willing to sacrifice that in favor of other things? You have to figure out what you want – and to picture how things will look from your finished house, both in and out.

Exposure to the sun: Enough sun exposure will heat your house – but too much of it will overheat your place. In colder areas, too little or too much sun can be the difference between snow and ice on your driveway.

Utilities: Water, electricity, and gas are all a given for most people. Not for those who are building their own house, though. Does your lot have access to utilities? Are the utilities at the property line or will you need to bring them in? Do you have access to a municipal water system, or are you going to need a well? Are you able to tap into a sewer system or will your home need a dedicated septic system?

Access: Can you get to your future house from public-access roads? Sometimes, a plot of land is only accessible from other people’s property; if that’s the case, you need an easement to access your house through private land. That could turn into a legal hassle.

Zoning: Zoning laws and a major consideration when building and proper zoning could be the difference between building your dream house and having a plot of land you no longer want. You need to check and double-check your land’s zoning rules and regulations to make sure you can build what you want.

Survey: No matter if someone surveyed the land not too long ago, you need to survey the lot you want to buy. That’s the only way to know where you can build and where your property ends.

Soils and perc tests: Believe it or not, certain soils like clay and rock can be problematic for building houses. You need to perform a soil test before you build. Savvy buyers will do these tests as a part of the due diligence portion of the sales process. This way you don’t end up with a lot you can’t build on.

How to pay

Cash: Cash is king. Always was and always will be. And this is even truer when you’re buying land to build a house.

Sure, you can take a loan to buy land (although they are more expensive than your average mortgage), but if that’s the case, you’ll have to pay back the loan and invest in building your house at the same time.
On the other hand, if you buy the land using cash, you can then use your new property as equity to finance construction.

Land Loan: As we’ve discussed, land loans are different from mortgages. They have higher interest rates, are not that simple to obtain. These loans have much shorter terms and require a good credit score as well as a 20% to 30% downpayment.

Usually, land loan interest rates are much higher than the average mortgage interest rate. And you have to pay it back in 3 to 5 years; that’s almost ten times less than your average 30-year mortgage.

USDA: Not all land loans are equal, though. If you wish to buy land in a rural area, you might qualify for a loan from the U.S. Department of Agriculture (USDA) – and almost 97% of all Americans are eligible for it.
These loans have few requirements, don’t need a down payment, and feature a fixed interest rate.
The USDA loans are for people who want to build their primary residence, not for any other purpose. And you’ll have to meet specific criteria to ask for one.

Owner Carry: If you don’t have the cash right now and don’t qualify for any loan, it’s not over yet. You can arrange a loan-like scenario with the land’s owner.
Because financing a land purchase can be difficult, property sellers will agree to act as the bank and carry the loan for the sale. The buyer makes payments directly to the property owner. In these scenarios, the buyer will often be asked to make a balloon payment after a number of years. In most cases, the landowner is paid off once the purchaser obtains construction financing.

The relationship between lot cost and total building cost

One final thought when it comes to building your home and the purchase of the lot. Cost and value are two very important factors. It is important from an investment standpoint that you keep the relationship between lot cost and home value in the proper relationship.

The lot price is traditionally 25% of the total cost of the entire home building project. Failing to observe this metric can cause problems further down the road when it’s time to sell the home. After construction, the lot price becomes a part of the home price. If you pay too much for the lot, it increases the price per square foot of the home.

When it’s time to sell, your home is compared to other homes on the market. If your value is in the lot, it’s usually difficult to recover those costs when it’s time to sell.

The bank is also going to be concerned with this when it’s time to get your construction financing. There are requirements you’ll have to meet for this type of loan. Such as showing detailed specs, providing proof of income, and having a good credit score. They vary depending on the loan you’re after.

In Conclusion

Finding an ideal spot to build your dream home can be a difficult task but at the end of the day, it’s worth the journey. In a world where there are very few truly special homes, this is your opportunity to get exactly what you want and make it special. There is a special pride you see in people that have built their dream homes that you almost never see in those that settled for a tract home in a cookie-cutter subdivision.

So, if you are up for the task the rewards are worth it but make sure to use the advice of professionals and experts in the field. Mistakes in this type of project can have serious consequences.

Source: realtybiznews.com

Bodnar of MMG: Rates Move Higher, But We May Have Found a Bottom

Bill Bodnar of The Mortgage Market Guide (MMG) says that rates moved higher this week, but we might have found a bottom.

“We have numbers for you, your clients and partners to follow,” Bodnar says. “Rising lumber prices are hitting New Home Builders. Was today’s weak Housing Starts a sign of things to come?”

Watch the short video to see what it means for you.

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Source: themortgageleader.com

Buyer Demand Shores Up Builder Confidence

After dropping from record high levels by a total of 7
points over the last two months, the index that measures home builder
confidence has stabilized.
The Housing Market Index (HMI), produced by the
National Association of Home Builders (NAHB) and Wells Fargo, rose 1 point in
February to 84.

“Demand conditions remain solid due to demographics, low mortgage rates and
the suburban shift to lower cost markets, but we expect to see some cooling in
growth rates for residential construction in 2021 due to cost factors, supply
chain issues and regulatory risks,” said NAHB Chief Economist Robert Dietz. “Some builders are at capacity and may not be able to expand production due to
these headwinds
.”

“Lumber prices have been steadily rising this year and hit a record high in
mid-February, adding thousands of dollars to the cost of a new home and causing
some builders to abruptly halt projects at a time when inventories are already
at all-time lows,” said NAHB Chairman Chuck Fowke. “Builders remain very
focused on regulatory and other policy issues that could price out households
seeking new homes in a tight market this year.”

NAHB surveys its new home builder members each month, asking for their perceptions
of current single-family home sales and sales expectations for the next six
months as “good,” “fair” or “poor.” The survey also asks builders to rate
traffic of prospective buyers as “high to very high,” “average” or “low to very
low.” Scores for each component are then used to calculate a seasonally
adjusted index where any number over 50 indicates that more builders view
conditions as good than poor.

The component measuring current sales conditions was unchanged from January
at 90, while the component measuring sales expectations in the next six months
fell 3 points to 80.
The index charting traffic of prospective buyers rose 4
points to 72.

Regional scores are given as three-month moving averages. The score in the Northeast
rose 2 points to 78 and the Midwest declined 1 point to 81. Both the South and
the West lost 2 points to 84 and 93, respectively.

Source: mortgagenewsdaily.com

Bidding wars heat up, but buyers are undeterred

Home buyers in the U.S. are facing increasingly fierce bidding wars, but even as prices rise and competition heats up, they’re not giving in.

A new survey by the National Association of Home Builders last week found that around 40% of prospective home buyers have been unable to purchase one because they keep getting outbid, CNBC reported. One year before, the main reason people couldn’t find a home to buy was due to unaffordable prices.

A second survey by Redfin found that 56% of its agents said they’ve faced a bidding war when making offers on behalf of their clients. It seems that bidding wars occur most frequently on higher priced homes in the $800,000 to $1 million region, Redfin reported.

Redfin’s chief economist Daryl Fairweather said he expects bidding wars to become more common this year, involving even more buyers.

“The best thing buyers can do is prepare: Prepare to see homes quickly as soon as they hit the market; prepare by talking to a lender and getting preapproved; and prepare by talking to your agent about how much a home you like is worth so you can go into a bidding war with your strongest offer tactics, but know when to back away if the price escalates more than you’re willing to pay,” he said.

The Redfin survey found that Salt Lake City, where 90.2% of all bids face competition, sees the most bidding wars, followed by San Diego (78.9% of all offers), the San Francisco Bay Area (77.1%), Denver (73.9%) and Seattle (73.8%).

CNBC said that bidding wars are being driven by a combination of record low mortgage rates and low inventories in most housing markets. The number of homes for sale in the U.S. was down 43% in January from one year ago, it said.

“Lower mortgage rates are making monthly payments for higher-priced homes more manageable,” Danielle Hale, realtor.com’s chief economist, told CNBC. “But finding a home that checks the right boxes amid limited supply, and saving up for the larger down payment needed with higher home prices, continue to be challenging, especially for first-time home buyers who haven’t accumulated home equity as prices have gone up.”

Source: realtybiznews.com

Home Builder Confidence Improves, but High Construction Costs Remain a Concern

The numbers: The construction industry’s outlook improved in February amid better foot traffic from home buyers, even as the cost of building homes increased.

The National Association of Home Builders’ monthly confidence index rose one point to a reading of 84 in February, the trade group said this week. The modest increase comes after two consecutive months where the index has dropped.

Index readings over 50 are a sign of improving confidence. Last spring, the index dropped below 50 as concerns regarding the coronavirus pandemic grew, but the index rebounded and later hit a series of record highs in the fall.

What happened: The index that measures sentiment traffic of prospective buyers increased four points to 72. Comparatively, the outlook regarding current sales activity held steady between January and February, while the index of expectations for future sales over the next six months declined by three points to 80.

On a regional basis, builders’ confidence regarding the housing market in the Northeast improved dramatically, rising from 68 in January to 89 in February. Builders also grew more confident about the state of the market in the Midwest and maintained their positive outlook on the South. Confidence worsened slightly in the West, however.

The big picture: Demand for new homes remains extremely high. The lack of existing homes for sale, plus renewed interest in suburban living amid the pandemic, is pushing buyers further out from major cities and toward newly-constructed developments. But price pressures could begin to affect builders and buyers alike in the coming months.

“Lumber prices have been steadily rising this year and hit a record high in mid-February, adding thousands of dollars to the cost of a new home and causing some builders to abruptly halt projects at a time when inventories are already at all-time lows,” Chuck Fowke, who is the current chairman of the National Association of Home Builders and a custom home builder from Tampa, Fla., said in the report.

“Builders remain very focused on regulatory and other policy issues that could price out households seeking new homes in a tight market this year,” Fowke added.

What they’re saying: “Housing starts and permits should moderate, but from the highest levels since 2006, as building activity continues to be supported by strong demand for homes — especially single-family construction — and low inventories,” Rubeela Farooqi, chief U.S. economist at High Frequency Economics, wrote in a research note.

Market reaction: The Dow Jones Industrial Average and the S&P 500 index were both down slightly Wednesday morning.

Source: realtor.com

Should You Buy a New Home or an Old Home?

It’s time for another match-up, this time we’ll compare buying a new home versus purchasing an old one.

For the record, some home builders refer to existing homes as “used,” which sounds kind of silly considering we’re talking about a house and not a car.

Ultimately, it’s a marketing gimmick to sway you toward buying new as opposed to old, but let’s continue on to determine the pros and cons.

Millennials and Gen X Are Big on New Homes

types of home buyers

A recent report from the National Association of Home Builders found that interest in newly-built homes has surged.

They noted that during the fourth quarter of 2020, 41% of prospective buyers were searching for a newly-built home, double the 19% share a year earlier.

At the same time, the share interested in an existing home fell from 40% to 30%.

It’s even more pronounced when we break it down by generation, with 50% of Millennial and 48% of Gen X buyers looking to buy a new home.

Meanwhile, just 13% of Boomers indicated that they were looking for a new home vs. existing.

Interestingly, Gen Z is a little more into existing homes than Boomers with a 38% share, but still below that of Millennials and Gen X.

New Homes Are Untouched and Clean

  • The number one reason to buy a new home is probably the fact that it’s never been lived in
  • Some people may not like the idea of living somewhere that was previously occupied
  • It also might feature the newest amenities such as improved insulation and solar panels
  • And in theory you shouldn’t have to repair or renovate anything right away

The most obvious benefit to buying a new home as opposed to an old, existing, or used one is the fact that it’s brand spanking new.

It’s untouched, it’s clean, everything is in good working order and nothing needs to be repaired. At least that’s the hope.

That’s a pretty huge incentive to buy new. You won’t have to worry about the typical costs of homeownership for the first several years, right?

Another benefit to buying new is that the home (or townhouse or condo) should have all the latest amenities.

Remember when it was all the rage to have stainless steel appliances and granite countertops?

Well, today’s new homes come with solar panels, energy-saving windows, smart appliances, USB outlets, electric vehicle charging stations, thermostats and door locks you can control with your phone, and other features that might make your used home look really old, especially a few years down the line.

Aesthetics aside, these upgrades could actually save you a lot of money each year on utility costs because they’re designed to be cost-efficient, not just handy.  You might even get a tax break!

Not only that, but many of these new homes use low-VOC paints and flooring, which are supposedly better for your health. Who knows what lurks in some of the older homes?

Additionally, new home buyers often get the opportunity to fine-tune the home they buy by selecting certain features, colors, styles, etc., and even financing any add-ons into the mortgage loan amount.

It Can Be Easier to Buy a New Home

  • It might be easier to finance a new home with a mortgage
  • Home builders often have their own home loan divisions
  • So they’ll be motivated to work with you to get the deal done
  • But still take the time to shop around and negotiate since you don’t need to use their preferred company

And speaking of mortgages, most home builders have their own financing departments that make it easy to get a mortgage.

Whether it’s the best deal is another question, but if you simply want in, your odds are probably better with a new home.  After all, the builder has a vested interest to get you financing.

There’s probably also a lot less competition for a new home, seeing that you’re probably checking out a brand new neighborhood full of vacant homes to choose from.

This can be a huge advantage in a seller’s market, which we’re experiencing at the moment. Instead of a bidding war, you might be able to pick and choose from a selection of available properties.

You can even pick among different sizes and floor plans to get just the right amount of space, as opposed to having to conform to what’s available in the existing market.

You might be thinking, hey, this sounds great, sign me up now! Why on earth would I want a used home with dodgy popcorn ceilings and laminate countertops?

But wait, there’s more to homes than their shiny exteriors and what’s inside.

Don’t Forget About Location…

  • Location is and will always be the biggest property value driver
  • And new construction homes are often in less desirable areas
  • Or in the outskirts of urban areas because that’s where new land is available
  • Be sure to take that into consideration as a major tradeoff to buying a new home

Let’s face it; the old adage that location is everything in real estate is true. It’s always been true, and always will be true. That is, if you want to see your property actually go up in value.

And guess what. Brand new homes often ren’t being built in the best locations. When it comes down to it, there’s no space for a new development in an established or central location.

Sure, you might see a new condo development, but new homes most likely won’t be that central. They’ll be on the outskirts of town, or in a “trendy” or “up-and-coming” area.

In other words, there’s going to be a commute if you buy new, and the location might be questionable at best in terms of value.

There might even be multiple new developments surrounding yours, with tractors and hammering construction workers doing what they do all day long.

That being said, it is possible to buy a new home in an area that flourishes. One hint it’s the right area might be the stores that are built nearby, such as a Whole Food’s or Trader Joe’s.

Of course, with an existing or used home, you can buy in the heart of the city, or in an area you know well that is insulated by a lack of available space and construction.

That buffer means the property should hold up well in terms of value, even during a downturn, assuming the area isn’t subject to obsolescence.

A used home might also give you the ability to walk to work, or to popular restaurants, bars, shops, and so on.

At the same time, a used home doesn’t necessarily have to be old inside. If you shop around, you might be able to find an old home that has already been remodeled to your liking.

And even if it hasn’t, that shouldn’t stop you from buying it and making renovations if it’s got good bones.

New Homes Are 20% More Expensive

  • Ultimately you pay a premium for a new home (just like a brand new car)
  • Apparently the cost is 20% more on average per a study from Trulia
  • So while a new home might be cheaper with regard to maintenance and renovation
  • You still need to consider the upfront cost to get an apples-to-apples comparison

A while back, Trulia determined that new homes (built in 2013-2014) cost roughly 20% more than similar existing homes.

They also found that two in five Americans would prefer to buy a new home, compared to just 21% opting for an existing home and 38% declaring no preference.

But when it came to that 20% markup, only 17% would actually pay the premium to get the new house.

So to get this straight, you might have to pay 20% for a new home AND you won’t be in a central location.

You’ll be in an untested location that might wind up being a ghost neighborhood in a decade if things don’t work out as planned.

During the most recent housing crisis, a lot of new home communities were hit the hardest, whereas existing homes saw their values decline but prop back up over time.

Of course, if you opt for new you’ll probably have all the latest technology and no major issues.

And if you go with an older home, you might have major bills on your hands when the roof gives out, or you discover serious plumbing issues.

So you’ll need to do your due diligence when buying an old home to ensure the property is in adequate shape. This means paying for a quality inspection (or two).

Then again, I’ve heard really negative stuff about new homes too, with many claiming workmanship has gone to you know what these days.

In other words, you’re not out of woods if you buy new either, though there might be some kind of warranty in place for a while.

At the end of the day, it’s probably okay to consider both new and used homes when looking for a property, and including both types should increase your odds of finding a winner.

As long as you take the time to inspect the property and the neighborhood, negotiate the right place, and make sure you can afford the place, you should be okay.

Lastly, you should make sure you actually want to own as opposed to rent because owning comes with many more responsibilities, whether you buy new or used.

Advantages to Buying a New Home

  • Brand new, clean, no major issues
  • Move-in ready (no wait or work to be done)
  • Cool new technology
  • Green features could reduce utility costs and/or provide tax incentives
  • Trendy design
  • Ability to customize
  • Can finance additions into mortgage
  • Possibly easier to get financing with home builder
  • Less competition, more choices on floor plans

Disadvantages to Buying a New Home

  • More expensive than buying used
  • Location probably isn’t ideal
  • Despite being new, workmanship might be questionable
  • Could be subject to costly HOAs, even if it’s a house
  • Neighborhood dynamic is unknown
  • Property values might be more volatile
  • Construction nearby (eyesore and noisy)
  • More cookie-cutter, less unique

Advantages to Buying an Existing Home

  • Possibly cheaper
  • Better, more central location
  • Can buy in an established school district
  • Can own in a more reputable and recognized neighborhood
  • Old house might have new upgrades
  • You can always renovate if need be
  • Older houses tend to have more character, custom design
  • Could actually be built better than a new home

Disadvantages to Buying an Existing Home

  • Harder to find an existing home (less inventory)
  • Might have major problems you don’t initially notice
  • Financing could be tricky (if unpermitted work, etc.)
  • Could still be more expensive than buying new
  • Fewer amenities, especially as homes get more tech-integrated
  • The neighborhood might be in decline
  • More competition to get your offer accepted
  • Might have to settle for a smaller, less ideal home to get right location

Source: thetruthaboutmortgage.com

Low Rates, COVID are Motivating Prospective Home Buyers

A
high percentage of those who told the National Association of Home Builders
(NAHB) late last year that they were thinking of buying a home have now turned
thought into action. Rose Quint writes in the NAHB Eye on Housing blog
that 15 percent of those queried in its 4th Quarter 2020 Housing
Trends survey said they were considering a purchase and now 56 percent of them
are actively looking
. A year ago, only 43 percent of those considering buying
had shifted into gear.

Quint
says this is the fourth consecutive year-over-year
rise in the share of prospective buyers who have become active buyers. She identified
several possible reasons for the most recent uptick; fear of missing out on low
interest rates
, a need for more space due to COVID-19, and a desire to move to
outlying suburbs.

Most of the increase in buying
activity was among Millennials and Gen X’ers. Millennials who transitioned from
thinking to action rose from 46 percent in Q4 of 2019 to 65 percent in the same
quarter of 2020 and for Gen X’ers the change went from 43 percent to 57
percent. The shares among Gen Z and Boomer generations remained relatively flat
with a 1-point increase in each case to 43 percent and 38 percent,
respectively.

Geographically, larger shares of
prospective buyers in every region are actively trying to find a home to buy
than a year ago, but the increase is most notable in the West and Northeast.

Quint says that, as the share of
prospective buyers has increased, so has the length of time they spend
searching. In the fourth quarter of 2020, 69 percent of buyers actively engaged
in the purchase process have spent 3 months or longer looking, compared to 60
percent a year earlier. This marks the eighth consecutive year-over-year gain
in the share of active buyers looking for three months or more for a home to
buy.

Source: mortgagenewsdaily.com

11 Products Now in Short Supply Due to the Pandemic

Unhappy gamer
Krakenimages.com / Shutterstock.com

Ever since the coronavirus pandemic made its unwelcome presence felt, products have been disappearing from store shelves. From toilet paper to hand sanitizer, many goods we take for granted have been tough to find for long periods.

Thankfully, many of these products are now available again in abundance. But others that once seemed plentiful are suddenly scarce.

Following are some products in short supply right now due to the pandemic.

1. COVID-19 vaccine

Patient getting a vaccine
Andrey_Popov / Shutterstock.com

In a perfect world, there would be enough COVID-19 vaccine that we all could rush out and get vaccinated today. But if 2020 taught us anything, it’s that we do not live in a perfect world.

The effort to create, test and distribute a vaccine for the disease caused by the coronavirus has been nothing short of heroic. But there still is only so much vaccine to go around, which has led to rationing. For now, high-risk groups are getting the medicine first.

President Joe Biden recently said he hopes the vaccine will be available to the bulk of Americans by spring.

2. Grape-Nuts

Man shopping for groceries
wavebreakmedia / Shutterstock.com

OK, this just seems plain weird. Yes, you would expect things like disinfectant wipes, face masks and household bleach to be red-hot commodities during a pandemic. But Grape-Nuts?

This shortage comes down to a simple supply-and-demand issue we have seen a lot during the COVID-19 crisis. People want their Grape-Nuts, but providing them is tougher than you might imagine.

Kristin DeRock, Grape-Nuts brand manager, told USA Today in late January that making the wheat-and-barley breakfast staple involves “a proprietary technology and a production process that isn’t easily replicated, which has made it more difficult to shift production to meet demand during this time.”

Sorry, Grape-Nuts fans — DeRock says the shortage may continue for a while.

3. Blood

Giving blood
Monkey Business Images / Shutterstock.com

We don’t often think of blood as a “product,” but it is when people need it. And when lives are on the line, blood suddenly becomes more precious than gold.

Sadly, the coronavirus pandemic has created a crisis for blood banks in many places. Blood banks said as recently as mid-January that the pandemic “continues to cause disruptions in blood collections and unprecedented fluctuations in the supply and demand for blood products.”

Now, harsh weather is worsening matters. In fact, the American Red Cross now is offering free $5 Amazon gift cards in an attempt to coax potential donors to venture outdoors this month. The nonprofit said in a Feb. 3 announcement:

“Over the past seven days, blood drives from coast-to-coast have been canceled due to severe winter weather, especially in the Northeast—impacting at least 4,600 donations that patients need to help them combat injury and illness, including COVID-19.”

So, if you can give, please do. As an added bonus, your donation may net you a free coronavirus antibody test. For more, check out “How to Know If You Have COVID-19 Antibodies.”

4. Boats

Boating
freevideophotoagency / Shutterstock.com

The high seas are one place the virus will have a hard time finding you, assuming you don’t end up on a cruise ship. But sailing out to your watery paradise has gotten tougher during the pandemic.

Boat sellers throughout Florida report waiting lists for new watercraft. Scott Ritter, who sells new boats at Ingman Marine in Port Charlotte, Florida, told the local newspaper this month that new orders could take four to six months to be delivered.

Lack of key supplies coupled with a surging demand once again are the sources of the problem.

5. New cars

Honda dealership
Azami Adiputera / Shutterstock.com

Being trapped inside for nearly a year probably has you itching to hit the open road. But if such plans rely on finding a new car, you may have to keep those dreams in neutral.

Japanese automakers Honda Motor and Nissan Motor, for example, expect to sell less product this year due to a global shortage of semiconductor chips. The chip-making slowdown — yes, due in part to the pandemic — means inventory will not meet demand.

Honda and Nissan expect to sell a combined 250,000 fewer cars in their current financial year. In an online press briefing, Seiji Kuraishi, Honda’s chief operating officer, said:

“Popular models that sell well were hit hard by semiconductor shortage. We needed to swap around and adjust production plans. But that wasn’t enough.”

Things are expected to improve in the second half of 2021.

6. Xbox consoles

Xbox Series X
Natanael Ginting / Shutterstock.com

Dedicated gamers might be forgiven for wondering aloud, “Pandemic? What pandemic?”

After all, millions of folks spend countless hours in their living room or basement playing video games, blissfully unconcerned about the world outside.

But a little cloud is floating into that gaming utopia: A Microsoft representative told The New York Times in late January that supply constraints could keep new Xbox consoles in short supply through at least June.

7. PlayStation 5 consoles

PlayStation 5
charnsitr / Shutterstock.com

So, you’re brokenhearted over the Xbox shortage when you have a lightbulb moment: “I’ll just get a PlayStation 5 to tide me over!”

Unfortunately, the same supply constraints bedeviling Microsoft are also making life difficult for PlayStation manufacturer Sony.

Don’t panic, gamers. The world outside is less frightening than you think. Honest.

8. Rural homes

Oregon rural home in the country
Rigucci / Shutterstock.com

Has the risk of living in a crowded city during a pandemic left you considering fleeing to the boonies? You are not alone.

Millions of Americans have suddenly warmed to the charms of country living. The number of homes for sale in rural areas nationwide plunged a record 44.4% year over year for the four weeks ending Jan. 21, according to real estate brokerage Redfin. The number of homes for sale in suburban areas fell 38.4% over the same period.

Those numbers compare with a far more modest 16.9% dip in urban neighborhoods. In a Jan. 29 announcement, Redfin chief economist Daryl Fairweather says:

“Homes in rural and suburban areas remain popular as the pandemic and remote work continue to motivate buyers to prioritize indoor and outdoor space over commute times and urban amenities.”

9. Lumber

Moving lumber
tvist / Shutterstock.com

So, new homes and rural homes are vanishing fast: Perhaps it makes sense to simply stay home and renovate your current abode.

Ah, if only it were so easy to escape the long arm of the pandemic. COVID-snarled supply chains — and heavy demand from consumers — have caused lumber supplies to fall. An October 2020 National Association of Home Builders survey found that 77% of remodelers reported a framing lumber shortage.

Last year’s West Coast wildfires didn’t help matters. As supply has fallen, prices have risen. Where have we heard that tale before?

10. Dogs

Woman working from home
Indypendenz / Shutterstock.com

The world went to the dogs in 2020 — literally. Families and individuals cooped up in their homes suddenly decided they wanted canine companionship.

We applaud their excellent taste, but all that love for puppies has created shortages of adoptable hounds.

The dearth of dogs has been a long time in coming. Yahoo reports that the last two decades have seen a surge in demand for pets, especially dogs.

11. Bicycles

Woman with bicycle
Zoom Team / Shutterstock.com

Finally, one of the oldest forms of transportation — the beloved bicycle — has suddenly become one of the scarcest.

Sales of adult ­leisure bikes soared 121% early in the pandemic, and the wheels came off the supply of new bikes as a result.

In mid-September, Jimmy Revard, co-owner of The Bike Line in Indianapolis, told Bicycling magazine:

“If a customer were to order a new bike today, the earliest we would likely receive it is December and maybe even as late as May.”

Things haven’t improved much since then. The bike and parts shortage is expected to last — brace yourself — until possibly 2022.

Disclosure: The information you read here is always objective. However, we sometimes receive compensation when you click links within our stories.

Source: moneytalksnews.com

4 Things We Love About 2021’s New American Home—and 3 Things We Could Do Without

Are we nearing the end of the stream of reality TV–ready homes with all-white kitchens and gray tones everywhere? If this year’s New American Home® is any indication, then you can bet on it.

The annual show home constructed to display the most exciting new amenities, styles, and technology is a big departure from the luxury residences of the previous few years.

Instead of a sprawling house in the suburbs with seamless indoor-outdoor living and a drool-worthy infinity pool, this year’s three-story home is in the downtown Winter Park, FL, corridor. It has a more industrial, urban vibe with bright, colorful interiors—no all-white vistas to be found.

The boxy, 5,536-square-foot house built on the site of a former office building and a parking lot is not for sale at this time. It was revealed this week as part of the annual International Builders’ Show, which took place virtually due to the coronavirus pandemic.

So what are our favorite elements of 2021’s New American Home? Let’s dive in.

We love: The playful kitchen

The kitchen in this year's New American Home wasn't the all-white kind that has dominated real estate reality TV.
The kitchen in this year’s New American Home wasn’t the all-white kind that has dominated real estate reality TV.

Courtesy of Jeffrey A. Davis and Pro Builder Media

The showstopper of the three-bedroom, 4.5-bathroom home is easily the kitchen. It’s positioned on the open third floor to allow more natural light into the space. And instead of crisp white everything, this kitchen mixes darker walnut woods with brighter colors and an assortment of finishes. It connects to an outdoor terrace outfitted with bright orange pops of color.

The floor-to-ceiling walnut and glass china cabinet is a gorgeous way to show off dishware. The terrazzo-patterned quartz island brought the different elements of the kitchen together.

“It just seems … people went through a period where their houses were either white or gray and they didn’t have a lot of the warm tones,” says the architect of the project, Phil Kean, of the Phil Kean Design Group in Orlando, FL.

The group also constructed the home and did the interior design.

“We’re going to see people warming up their facades and their houses,” Kean adds. “A lot of people spent the last year at home, and color really helps the spirit.”

We love: The warm wood

Walnut flooring
Walnut flooring

Jeffrey Davis

We also admire the darker, walnut wood used throughout the home—in the flooring, the kitchen cabinets, the floating staircase, and more. The same wood in the kitchen was also laid down in the bedrooms, providing continuity throughout the home.

It’s a welcome departure from the gray-toned flooring that’s become ubiquitous over the past few years.

“Some woods have too much yellow to them, and some woods have too much red in them,” says Kean. Walnut is “a really good wood for having those midrange tones, and it goes with everything.”

We love: The gridded windows

The industrial-style, gridded windows bathed the New American Home in natural light.
The industrial-style, gridded windows bathed the New American Home in natural light.

Courtesy of Jeffrey A. Davis and Pro Builder Media

We’re also fans of the New American Home’s oversize, gridded windows. Reminiscent of industrial warehouses, these beauties bathe the property in natural light. Transoms above the windows add interest and let in even more light.

“On clear nights, you can see the fireworks from the theme parks,” Kean says of the top-floor windows.

We love: The eco-friendly features

The New American Home 2021
The New American Home 2021

Jeffrey Davis

The various environmentally friendly features are also impressive. Solar panels were installed on the roof, helping the home to generate its own power. It’s also Energy Star–certified and EPA Indoor airPLUS–qualified.

The home also features a system that monitors the air quality inside the home and brings in fresh air when needed. That could come in handy in the middle of a pandemic!

“It’s set up to be a super energy-efficient home,” says Kean. “We generate more energy than we use in a day.”

This year’s home also includes an art gallery entrance, a room specifically for pet dog(s), and a three-car garage. The second floor is devoted to the master bedroom, master bath with a walk-in closet, and exercise room. The top level boasts a great room and music room with 14-foot-tall ceilings.

———

While there’s so much to love about the New American Home, there are also a few things we could live without.

We could do without: The bedroom’s padded leather wall

This year's New American Home features a leather wall—in the bedroom.
This year’s New American Home features a leather wall—in the bedroom.

Courtesy of Jeffrey A. Davis and Pro Builder Media

We love that the designers behind this home took some bold chances. But we ultimately aren’t fans of the padded brown leather wall in this bedroom.

The tufted accent wall is intended to be an extension of the headboard. Unfortunately, we think it makes the bedroom feel heavy. The work nook at one end of the room—although a luxury in the time of COVID-19—gives the room a hotel vibe. And hey, maybe hotel living is a dream come true for you, but we were hoping for something a little warmer and more personal.

We could do without: The glass staircase handrails

The floating walnut staircase—complete with lighting underneath each tread—is splendid, but we have issues with the glass handrail that frames it. Although the glass keeps things feeling open and contemporary, we think it cheapens the look.

Plus, we’re dubious about the functionality (safety first!). This staircase could be better served with a handrail or other material that’s not attempting to be invisible.

We could do without: The lack of outdoor space

Outdoor space is a must in the age of COVID-19, but there isn't much here.
Outdoor space is a must in the age of COVID-19, but there isn’t much here.

Jeffrey Davis

The New American Home in years past has flaunted its outdoor spaces: luxurious terraces with fire pits, infinity pools, and breathtaking views. For many of them, the outdoor space was the star of the show. That isn’t the case here; in fact, this home doesn’t come with much outdoor space at all.

To be fair, the team behind the New American Home did as much as it could with what they had—there’s a balcony or terrace on each floor. And this home was designed for a more urban environment, where walkability is key. But with folks cooped up due to COVID-19, a big backyard has practically become a pandemic survival essential—and we’re feeling the void in this home.

Source: realtor.com