Debunking Misconceptions About Purchasing a New Construction Home

Many first-time homebuyers may be hesitant to consider buying a brand-new home, assuming that it will be too expensive and take too long. However, these misconceptions about new construction may be causing potential homebuyers to miss out on a smart path to homeownership that makes sense for many Americans today. Given declining housing affordability and limited existing home inventory, a full one-third of inventory on the market is now new-construction homes. Therefore, in a housing market plagued by limited inventory, prospective homebuyers should not overlook new-construction homes as an option.

One of the common misconceptions about new construction is that they are more expensive. While new construction homes may have a higher upfront cost, this price tag does not tell the whole story. It’s true, on average, that new homes of similar sizes historically outprice pre-owned by about 16%. However, buyers should consider all the costs of purchasing to understand their total cost of ownership. A new-construction home will have a brand-new roof, appliances, HVAC equipment, and major systems that homebuyers likely won’t need to repair or replace anytime soon, which can save a buyer from having to replace, upgrade, or bring to code elements of a previously owned home.

Another misconception is that buyers will have to wait a long time to move into a new-construction home. New construction homes do take time to be built, on average about 6.5 months from the ground up, this does not mean that buyers will have to wait that long. Builders often start building long before they have a buyer, and construction on these “spec homes” might already be well underway or even completed before a buyer strikes a deal. So, if buyers don’t want to wait, they can see if there is a spec available. However, it is worth keeping in mind that the build time will vary widely.

Lastly, some buyers may believe that it is harder to finance a new-construction home, but this is not the case. Thanks to potential builder incentives and lenders liking the fact that a person is buying something new, which translates to less risk, there might be more simplicity in financing a new home. Builders often maintain relationships, partnerships, or even wholly owned subsidiaries whose primary focus is to help borrowers find better lending options. Additionally, title companies that work with builders tend to do “batch” title searches on the new parcels in a community all at once, which helps an urgent buyer get to the closing table faster.

While purchasing new construction is indeed different from purchasing a previously owned property, many misconceptions abound about new builds. Therefore, homebuyers who’ve heard these rumors should not count out new construction homes as an option. 

If you want more information about buying a new construction home in the Twin Cities Metro and surrounding areas; we have a FREE guide on just the topic. Send me a short email requesting a copy and I will send it over. My email is erica@iHeartMplsHomes.com and if you are ready to see the homes that are available. Please let us know and we will set you up on a custom search defining your preferred location and price pt. 

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