- While the local Parade of Homes still has plenty of luxury homes you can gawk at, those who plan a tour this spring can also look at a larger share of affordably-priced homes aimed at specific generations.
- As baby boomers leave behind their family homes, many are “right-sizing” instead of “down-sizing;” for many boomers, a new construction home in a retirement community is just the ticket.
- Builders are also setting their sights on millennials, who tend to love today’s slightly smaller lots — and the guarantees and warranties that come with new construction living.
Today’s new homes cost less than 10 years ago
While the home prices of existing and new construction properties have been on the rise for the last several years, new construction homes still haven’t reached their pre-recession levels; the cost of a new construction home (in terms of price per square foot) in Minnesota and western Wisconsin is still less than its peak in 2006 (Northstar MLS).
What’s causing this affordability? There are a few factors. First, the new construction market is balanced — buyers’ demand is well-matched with the number of in-market builders.
This means that new construction buyers aren’t typically facing the dangerously low inventory found in the existing home market — which is welcome news for buyers of brand-new homes.
Additionally, in an effort to remain price-competitive, many builders now use the following materials, including:
- Vinyl window frames instead of wooden frames
- Millwork (doors, door frames, baseboards, etc.) made of composite veneer rather than solid wood
- Wood floors that are engineered and pre-finished, rather than being installed and finished on site
Lastly, as raw land has become increasingly expensive, many of today’s builders are building in developments with smaller lots.
Boomers are “right-sizing” into new, transitional homes
As you prepare your Parade of Homes tour this spring, don’t be surprised if you see a crop of retirement community properties alongside the luxury homes you’ve come to expect.
While most assumed that baby boomers would downsize to smaller, more affordable homes, this generation continues to surprise. Many boomers are opting for new construction homes in maintenance-free communities, which will allow them to transition into retirement with ease and comfort.
Most of these newly built boomer homes are one-story ramblers, detached villas and townhomes — and despite being smaller in size than the family homes they previously owned, they are often more expensive, with more amenities. For this reason, many boomers are said to be “right-sizing,” not downsizing, as they shift into retirement mode.
This trend of new construction retirement housing is growing, but the demand far outweighs the current supply of inventory in these one-level living new construction communities.
If you’re a boomer looking at what comes next, start your plans sooner than later if you hope to move to a transitional living community with an attached or detached new construction home.
Millennials are ready for new construction homes, too
Though much is made of Generation Y (often called millennials) and their delayed approach to homeownership, this demographic is now reaching their prime working and spending years. And as they get married, plan for children or simply ease into the routines of professional life, many are looking at new construction properties.
Builders are responding by creating townhomes and two-story homes that match the needs of young professionals who are finally ready for life in the suburbs. The transition to lower-cost materials and smaller lots (as mentioned above) doesn’t seem like a consolation to these long-term former renters; after years in highly economized shared spaces, a small home with a yard and new finishes is a major upgrade.
Low inventory in the traditional market is one major reason that Gen Y is considering new construction — in many cities, buying an existing home can take months of research and dozens of counter-offers. But it’s important to remember that many millennials are also risk-averse; they came of age in a time when entry level jobs were scarce, and their student loan payments still averaged hundreds of dollars a month.
New construction homes, which come with warranties on appliances and systems, can be much more appealing than a property that could need major upgrades (and cash flow) at a moment’s notice.
Ready to get started?
Whether you’re in the market or just love to look at the new trends in home design, be sure to visit this year’s Parade of Homes, which Feb. 24-March 25, Thursdays through Sundays.
If you’re ready to dive into the new construction market, be sure to work with a local expert who has the relationships and insights you need to make a smart purchase. Reach out to our customer care team to get matched with a local new construction expert this spring.
Follow #BuyerInsights on Facebook, Twitter, Instagram and YouTube for even more tips on buying a home in Minnesota and western Wisconsin.