While the new construction market has lagged for the past few years, it’s now booming across Minnesota and western Wisconsin. If you’re considering purchasing new construction this fall or in the upcoming year, here’s what you should keep in mind.
1. What’s available?
As the market recovers, builders are beginning to develop “spec homes” in addition to model homes. In this case, spec is short for speculative – the builders know there is demand for the homes, so they begin development before the homes are sold.
“Spec homes are already in development, and may be customized slightly as the home is completed,” says Randy Bacchus, Director of Edina Realty’s New Homes Division. “They’re a great option for people who are transferring to the area, or those who have sold their home and need move quickly. Spec home buyers get a brand-new home without having to wait three to four months from groundbreaking to move-in day.”
Ready to begin looking? Search newly built homes in your area.
2. Why can’t supply keep up with demand?
Have you found it’s difficult to get a loan due to tight lending standards? Builders can relate. Today’s builders are walking a fine line as the market recovers. Lenders want to be sure they are funding solid developments.
“After the market correction, many developers didn’t follow through on the land that they were planning to develop. So even though demand is high again, lenders are cautious,” says Bacchus. “Plus, the surging market is only one piece of the equation. To go from raw land to a final development takes between 18 – 36 months.”
Bacchus and other experts predict that many more lots will become available in 2015 and 2016, as the housing market continues to stabilize and new home demand remains steady.
3. The cost – and value – of a new construction home
In our market, the median price of homes for sale is $215,000, while newly built homes are priced around $364,000 (Northstar MLS). Simply put, the new construction market is seeing solid growth in upper bracket homes as the market correction continues. The best way to see what’s available in your price range is to work with an expert who knows the market inside and out. Reach out to our New Construction team to get started.
Plus, don’t overlook the value of a newly built home. When a buyer purchases a new home, it “comes standard” with energy efficiency and the ability to fully customize everything from kitchen appliances to the wall colors without lifting a finger. A new home also comes with a home warranty.
“When you purchase an existing home, you don’t know if the next storm will bring a roof leak, or if the furnace will go two years from now. The price of a new home represents the true value of the property, including its brand new appliances, efficient mechanical systems, and the peace of mind that a new home warranty offers,” says Bacchus.
Check out our breakout of how existing homes and newly built homes differ in terms of cost, timing, location and setbacks.